Analysts still upbeat on rupiah
Dadan Wijaksana, The Jakarta Post, Jakarta
Profit taking stalled the rupiah's movement a bit last week, but analysts remained convinced the local unit would bounce back this week amid lingering positive sentiments in the market.
After soaring to 9,540 against the U.S. dollar, the rupiah lost steam to end the four-day week at 9,825 last Thursday. The unit stood lower at 9,830 in the previous week.
Profit taking broke loose on news that U.S. investment firm Farallon Capital Management had already paid the government for a 30 percent stake in Bank Central Asia (BCA) days before the March 28, deadline.
Farallon transferred the payment, worth some US$320 million, into an escrow account at Bank Indonesia by Thursday's deadline.
Citing last week's dip in the rupiah as normal, especially ahead of the long weekend, currency analysts believe good news would outweigh the negative, thus pushing the rupiah back on its upward path.
Analyst at PT DBS Vickers Wiwan Wiradjaja said the local unit had a good chance of gaining further ground against its U.S. counterpart, although corporate dollar demand would likely limit the progress.
"The rupiah is likely to spread at a rather wide range," he said, estimating this to hover at 9,650 to 9,800 to the dollar.
He said companies with foreign debts might purchase the dollar in the first half of the week, sending the rupiah down.
A rebound, however, was likely in the remaining days, he added.
A currency dealer at a local brokerage also brushed off concerns that last week's slight fall would mark the end of the rupiah's sparkling movement.
The currency's fall reflected a healthy correction ahead of the long weekend as traders preferred to hold the more stable dollar as a precautionary measure, he explained.
The dealer and Wiwan agreed that the approaching Paris Club meeting, scheduled for the second week of April, provided optimism on the rescheduling of foreign debt payment.
Indonesia plans to ask the Paris Club of creditors to reschedule some $5.5 billion in foreign debts, both principle and interest, that are due to mature between April 2002 and December 2003.
Rescheduling the foreign debt payment means less pressure on the rupiah.
Further news on government plans to divest more local banks should also provide a boost for the rupiah, Wiwan continued.
The success of the BCA sale is believed to have put Indonesia back on investors' radar, reviving confidence on future bank sales.
Next on this year's divestment list are Bank Niaga, Bank Danamon, Bank Lippo, and Bank Internasional Indonesia (BII).
On the stock market, the index ended a notch down last week, which traders attributed to profit taking in the currency market.
The Jakarta Stock Exchange (JSX) Composite Index closed last week at 481.78 points, down from 484.732 a week before.
A dealer at a Jakarta-based security firm blamed disappointing annual reports from a number of blue chip companies for the index's drop.
They include reports from the country's largest cigarette maker PT Sampoerna which recorded a lower 2001 revenue versus 2000.
For this week, dealers expect the market to trade flat to higher.