Rupiah to hover at narrow range as pressure stays<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
With demand for the U.S. dollar still high, the rupiah is
\nunlikely to weather any more gains from Bank Indonesia's (BI)
\nlatest anti-speculative forex measure to remain flat at its
\ncurrent rate of Rp 9,600 to the greenback this week and next.<\/p>\n
Increasing month-end corporate dollar demand for import needs
\nand servicing debts will prove to be a major factor weighing down
\non the rupiah, said analysts, balancing out a recent uplifting
\nmarket sentiment from the central bank's plan.<\/p>\n
\"The end result will only be a less volatile rupiah over the
\nweek, but it will still trade somewhere at the Rp 9,600 per
\ndollar level,\" currency analyst Farial Anwar from the Currency
\nManagement Group told The Jakarta Post over the weekend.<\/p>\n
\"The market will from then on wait and see for further
\ndevelopments of the situation, being cautious not to trade the
\nrupiah beyond the Rp 9,700 level.\"<\/p>\n
The rupiah closed its trading last week at Rp 9,650 a dollar
\non Friday, down from its Rp 9,620 level the previous week.<\/p>\n
The local currency had slipped to Rp 9,665 per dollar on the
\nback of increasing dollar demand from state oil and gas firm PT
\nPertamina for oil imports to secure the country's recently
\ndeclining fuel stock.<\/p>\n
The rupiah, however, later gained from BI's announcement of
\nits new regulation to limit next month all incoming dollar loans
\nand investments without underlying assets to a maximum of $1
\nmillion. It expects the new regulation will be able to curb
\nspeculative dollar trading, which could otherwise disturb the
\nrupiah's exchange stability.<\/p>\n
BI had previously supported the rupiah as well when it
\nrecently touched the Rp 9,700 level, by increasing the frequency
\nof its SBI promissory notes auctions to absorb excess liquidity
\nin the market, and required higher reserves from commercial banks
\nstashed in Bank Indonesia in order to limit any room for
\nspeculative dollar trading.<\/p>\n
The central bank has also coordinated with the government to
\nhelp provide Pertamina's dollar demand to prevent the oil and gas
\ncompany from directly purchasing it in the spot market.<\/p>\n
Under the 2002 state budget revision, the government targets a
\nrupiah exchange rate of Rp 9,300 per dollar.<\/p>\n
Farial explained that Pertamina's dollar demand will
\nnevertheless still be the most dominant factor in putting
\npressure on the market in the coming weeks, as the firm is still
\nracing with time to raise the country's fuel stock to a secure
\nlevel.<\/p>\n
\"The dollar demand could even increase considering oil prices
\nhave recently touched $60 a barrel,\" he said.<\/p>\n
\"Meanwhile, further dollar demand can also be expected as next
\nweek will be the end of the month, when corporations usually have
\nto service their foreign debts.\"<\/p>\n
Farial also doubted that BI's new anti-speculative foreign
\nexchange regulation would help support the rupiah in the long
\nrun, as speculators could easily find loopholes in it.<\/p>\n
\"Speculators can bypass the underlying assets requirement by
\nsetting up mock firms here, or splitting their speculative dollar
\nstock below the $1 million limit,\" he said.<\/p>\n
\"The central bank must therefore strictly enforce the
\nregulation to prevent this.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-to-hover-at-narrow-range-as-pressure-stays-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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