Analysts upbeat on rupiah, stocks

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.