Analysts upbeat on rupiah, stocks
Dadan Wijaksana, The Jakarta Post, Jakarta
Trading in both the rupiah and stocks is expected to be bullish this week amid continuing positive sentiment in the country, according to analysts.
Currency and stock analyst Ferry Latuhihin said the rupiah and the Jakarta Composite Index are likely to continue to benefit from recent positive developments, which have gradually improved investor sentiment toward Indonesia.
Ferry said optimism that the government would be able to secure some US$5.5 billion in debt rescheduling facility from the Paris Club of creditors this week would bode well for the local unit.
Japan and the U.S. have reportedly said they will support Indonesia's proposal for debt rescheduling at the Paris Club.
"The euphoria ahead of the Paris Club meeting combined with a slew of positive news is driving the rupiah's performance," Ferry told The Jakarta Post over the weekend.
Relative political stability along with the absence of major security disturbances have helped convince investors to invest in the country, thereby helping the local currency strengthen its grip on the U.S. dollar, he added.
The rupiah soared to a six-month high last week to close at Rp 9,560 against the dollar, compared to Rp 9,825 the week before.
The rupiah has been strengthening against the dollar since the beginning of the year, partly on expectations of high dollar inflows into the local foreign exchange market, as a result of privatization and the asset sale program, such as the BCA sale.
Wiwan Wiradjaja, currency analyst at DBS Vickers, also painted a positive outlook for the rupiah.
Aside from the Paris Club, Wiwan said, the completion of payment by the Farallon-led consortium for a 51 percent stake in BCA would continue to maintain sentiment in the rupiah.
Last month, the consortium made its first installment of around $320 million for its first 30 percent share, and on Friday it made the second payment of around $260 million for the remaining 21 percent stake.
Still, the country's huge public debt, which last year almost equaled gross domestic product, remains a concern and will limit the progress of the rupiah.
Both Wiwan and Feri shared the same view, saying that the rupiah would be hovering at a range of Rp 9,500 to Rp 9,600 against the greenback.
Meanwhile, moving accordingly with the rupiah, trading in the stock market is also seen to remain active with the index expected to be floating above 500 points.
The index increased significantly by over six percent in the past week to break the psychologically important level of 500 points. It closed at 508.99 points, way above 481.78 the previous week.
The success story of the BCA sale has ignited an overall investment appetite and news that state-owned PT Telkom will sell more of its shares in mobile phone unit PT Telkomsel will add to the positive sentiment.
Telkom reached an agreement last week to sell a further 12.7 percent stake for $429 million to Singapore Telecommunications Ltd.
"I think the index will be consolidated for the week between 500 and 510 points," Feri added.
Daily transactions averaged 1.468 billion shares last week valued at Rp 704.9 billion ($72.84 million) compared to the previous week's 1.26 billion shares worth Rp 582.5 billion.