Rupiah soars to four-month high<\/p>\n
JAKARTA (JP): Frenzied dollar selling on fear of a bullish
\nrupiah at the end of the country's political battle pushed
\nthe local unit to a four-month high when it ended Monday's
\ntrading at Rp 10,230 against the U.S. dollar, experts said.<\/p>\n
Khalil Rowter, head of fixed income research at PT Danareksa
\nSekuritas said players had either cut losses or taken profit from
\nthe sharp rise in the local unit.<\/p>\n
\"The market was concerned the rupiah gains would continue, so
\nit dumped the dollar at between 11,000 to 10,500,\" Khalil told
\nThe Jakarta Post.<\/p>\n
He said the rupiah was poised to become stronger if domestic
\npolitical developments currently unfolding did not lead to
\nviolence.<\/p>\n
The appointment of President Megawati Soekarnoputri on Monday
\nmarked the climax of a months-long standoff between her
\npredecessor, Abdurrahman Wahid and legislators seeking to oust
\nhim.<\/p>\n
The presidency was handed over to her during the Special
\nSession of the People's Consultative Assembly (MPR), which
\nAbdurrahman had tried to suspend but failed.<\/p>\n
A presidential decree ordering the suspension was ignored by
\nthe Military, which had been charged with carrying out the
\ninstruction.<\/p>\n
The rupiah made a jump to between 10,300 -10,400 from its
\nFriday close of 11,150, on news the decree had become
\nineffective.<\/p>\n
Also, fears of street violence from Abdurrahman's supporters
\nprotesting the special session failed to materialize.<\/p>\n
\"We've seen the worst ... the direction we're heading for is
\ntoward stability,\" Khalil continued.<\/p>\n
He said the market's immediate focus now was on the upcoming
\nCabinet lineup, and the repercussions of Abdurrahman's ouster.<\/p>\n
So far, he said, the market saw no imminent danger of chaos
\nbreaking loose in Abdurrahman's political heartland, East Java.<\/p>\n
He also saw no reason for the International Monetary Fund
\n(IMF) to further hold back its US$400 million loan tranche.<\/p>\n
The IMF said it planned the loan disbursement by early
\nSeptember at the latest, ruling out a suggestion it was linking
\nthe loan to Indonesia's political situation.<\/p>\n
Khalil said that with the resumption of the IMF's loan, the
\nmarket expected the return of foreign investors.<\/p>\n
\"We're talking about a fresh supply of dollars coming in ...
\nthis could be in three to four months from now, meaning the
\nrupiah gains don't stop here,\" he explained.<\/p>\n
However, Khalil said that corporate dollar demand could
\njeopardize the rupiah's further gains.<\/p>\n
Also, at Rp 10,000 many firms were likely to restart their
\ndebt restructuring talks, which would require them to make cash
\npayments, thus creating more dollar demand, he added.<\/p>\n
According to him, the rupiah may level off at between 9,750 to
\n10,000.<\/p>\n
With the 2001 state budget assuming a rupiah exchange rate of
\nRp 9,800 per dollar, it would be difficult to sustain a more
\noptimistic level, he said.<\/p>\n
Chief economist at Bank Mandiri Martin Panggabean concurred
\nwith Khalil's warning of dollar hunters capping the rupiah's
\ngains.<\/p>\n
\"Fundamentally, it's difficult for the rupiah to strengthen to
\nbelow 10,000,\" he said.<\/p>\n
But Bank Indonesia Governor Sjahril Sabirin said it was
\npossible for the rupiah to drop below the 10,000 level, providing
\nno violence ensued from the recent political developments.<\/p>\n
\"If it (the rupiah) keeps getting stronger, and assuming other
\nmonetary indicators remain under control, interest rates would
\ndrop automatically,\" he said.<\/p>\n
On the stock market, investors snatched blue chips and second
\nliners on the confidence that politics would drive the index
\nfurther up, said Ahmad Subagja of PT Niaga Sekuritas.<\/p>\n
\"It was euphoria, but concern lingers over the reaction of Gus
\nDur's supporters,\" he said, referring to the former president by
\nhis popular name.<\/p>\n
The Jakarta Stock Exchange (JSX) Composite Index surged to
\n470.22 on Monday trading, up from its Friday close of 460.91.
\n(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-soars-to-four-month-high-1447893297",
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