Analysts still upbeat on rupiah

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.