Rupiah to gain strength this week: Sjahril<\/p>\n
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin
\nexpressed confidence Saturday that the rupiah would strengthen
\nagain this week after last week's plunge.<\/p>\n
"Hopefully, after suffering from a shock (the rupiah) will
\nbecome normal again," he told reporters at the state palace after
\nattending a ceremony.<\/p>\n
He reaffirmed that the rupiah's ideal level was at between Rp
\n6,000 to Rp 7,000 per U.S. dollar.<\/p>\n
Sjahril said that if the rupiah weakened to below Rp 7,000 to
\nthe dollar, the level was "unrealistic".<\/p>\n
But market players do not seem to share Sjahril's optimism.<\/p>\n
Traders said that the rupiah as well as other regional
\ncurrencies would maintain their downward trend this week.<\/p>\n
"The rupiah is likely to re-test its three-month low because
\nthe sentiment is still negative," said a trader, pointing to
\ndomestic political uncertainty, the banking scandal and overall
\nregional bearishness.<\/p>\n
"If developments in the banking sector continue to worsen, the
\nrupiah will surely drop pass the Rp 8,000 level," he added.<\/p>\n
Dealers also said that trading sessions this week would be
\nquieter due to a longer weekend because of Tuesday's Independence
\nDay celebration.<\/p>\n
The rupiah ended Friday at Rp 7,925 per dollar, compared to Rp
\n6,962 in the previous week. The unit plunged to a two-and-a-half
\nmonth low of Rp 8,250 per dollar on Thursday.<\/p>\n
Dealers said that state banks intervened in the market by
\npurchasing rupiah, preventing it from a much more serious fall.<\/p>\n
Traders said that the rupiah was under heavy pressure due to
\nfresh banking scandal revelations, political uncertainty, falling
\nyields as interest rates drop, and regional bearish sentiment.<\/p>\n
The Bank Bali scandal, in which some Rp 545 billion was
\nquietly transferred from the bank into the account of a company
\nowned by businessmen affiliated to the ruling Golkar Party, has
\nsent tremors through the local financial and stock markets.<\/p>\n
Reports also said that other senior government officials and a
\ndeputy chairman of the Indonesian Bank Restructuring Agency
\n(IBRA) were involved.<\/p>\n
The scandal was disclosed late last month, and the government
\nhas yet to complete the investigation process.<\/p>\n
"The Bank Bali scam has deteriorated confidence in the
\ncountry. The market is now watching how the government settles
\nthe case," said economist Marie Pangestu of the Centre for
\nStrategic and International Studies.<\/p>\n
"The real culprits have to be caught," she said, adding that
\nif the government failed to settle the case in a credible way
\nconfidence would not return.<\/p>\n
Another banking development that created jitters in the
\nfinancial market was the major reshuffle of the board of
\ndirectors and commissioners of Bank Internasional Indonesia
\n(BII), the country's largest private bank.<\/p>\n
BII president Indra Widjaja and his father Eka Tjipta Widjaja
\nas the bank's chairman have to step down because they failed to
\npass the central bank's "fit and proper test", reports said.<\/p>\n
The Widjaja family controls Indonesia's second-largest
\nconglomerate, the Sinar Mas Group. BII is the group's financial
\nflagship.<\/p>\n
A rumor that Minister of Finance Bambang Subianto had resigned
\nalso worsened market sentiment on Friday.<\/p>\n
But Bambang's close associate denied the rumor. "I just met
\nwith Bambang today, and he said that he won't resign amid the
\ncurrent hectic situation," he told The Jakarta Post.<\/p>\n
The rupiah has also been hit by increasing political
\nuncertainty in the leadup to the upcoming November presidential
\nelection.<\/p>\n
The decline in the central bank benchmark interest rate to
\n13.03 percent last week had also contributed to a drop in the
\nlocal currency, traders said. (rei\/prb)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-to-gain-strength-this-week-sjahril-1447893297",
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