Aggressive U.S. dollar buying expected

Aggressive U.S. dollar buying expected

The Jakarta Post, Jakarta

In the first week of the new year, the currency market is
expected to be more active with demand for dollar will remain
high, putting the rupiah under familiar pressure, an analyst
said.

Noted currency analyst Farial Anwar told The Jakarta Post over
the weekend, the opening days of trading would usually be
highlighted by the more aggressive speculators.

"In early trading of the year, the market is likely to be more
active, marked by the aggressive trading by speculators," Farial,
who is also the director of PT Currency Management Group, said.

Farial added that the wide margin between demand and supply of
the dollar, coupled with the absence of pro-market monetary
policies will keep weighing on the local currency.

With the year-end festivities having come to an end, there
will be less demand for the rupiah and there will be no reason
for the local currency to strengthen.

From November to the third week of December, rupiah was on the
upward trend, mostly due to strong demands for the currency ahead
of the year-end festivities.

However, the rupiah got back to its declining trend as demand
for rupiah lessened.

Last week, rupiah closed at 10.450 against the American
greenback, down from 10.180 in the previous week.

And, as the demand for dollars remain strong while on the
other hand there is a lack of dollar supplies on the market,
Farial predicted the declining pattern of the rupiah would
continue.

Demands for dollar will still come from importers and
corporations who need to repay their huge foreign debts, and
speculators.

"We cannot underestimate speculators, because facts show that
it is easier to speculate against the rupiah rather than the
dollar," he warned.

On the contrary, the market is running out of resources to
supply the dollar, with the global economic slowdown affecting
the country's export performance and direct foreign investment.

The exporters and investors are used to be the main suppliers
of dollars into the country.

However, Farial forecasted the rupiah will go no lower than
10.500.

Unlike the currency market, trading in the stock market will
remain subdued in the first week of the new year, according to an
analyst.

"With most of the investors have yet to return from vacation,
I expect the market to remain quiet, especially in the first two
or three days of trading," Ario Ardhikari, an investment manager
at ABN Amro, told the post.

There will be a small number of speculators, he added, but
with the absence of big players and significant market stimulus,
both the trading volume and the index movement will be hovering
at a narrow range.

Last week, the Jakarta Stock Exchange Composite Index closed
at 392.03 points, up from 378.25 the week before.

Ario cited the slight increase in last week's index as normal
occurrence to close the year, but he doubted the increase trend
to continue this week.