'BCA sale to drive rupiah this week'
'BCA sale to drive rupiah this week'
The Jakarta Post, Jakarta
The rupiah has a good chance of strengthening further against
the U.S. dollar this week, amid rising confidence of an imminent
sale of Bank Central Asia (BCA), currency analysts say.
Currency and stock analyst Ferry Latuhihin, of state-run
Danareksa Securities, said the sale of BCA would likely set the
tone again for the rupiah this week.
"Positive sentiment lingers on the prospect of BCA's sale,
after it has entered its final stage," he told The Jakarta Post
last Friday.
The same factor has pushed the rupiah last week back into
9,000 territory for the first time since last October.
Weeks before it was already seen flirting along the 10,000
line partly on confidence of a smooth sale of BCA.
Two foreign investors are the surviving bidders for BCA,
signaling to other foreign investors that the government is
serious about getting the sale right.
"However the rupiah is likely to move in a narrow range
somewhere close to 10,000," Ferry said, adding that regional
currencies show signs of weakening.
According to him, the rupiah could have fared better last
week.
He said that in the past few days routine dollar hunters state
oil and gas company Pertamina, and state power company PT PLN
stepped up pressure against the rupiah.
The rupiah ended trading last Friday at 10,165 after reaching
a 9,958 high from 10,110 the week before.
"Stock movements may also affect the rupiah, since rises in
share prices mean foreign players (buying the shares) would want
to trade dollars into rupiah," Ferry said.
Elsewhere, a dealer at a foreign bank also said that market
players were taking their cues from the BCA sale process.
The political mess following the detention of House Speaker
Akbar Tandjung had so far had little impact, if any, he said.
Akbar was detained by the Attorney General's Office last
Thursday for questioning over his alleged role in a graft case
worth Rp 40 billion (about US$4 million) in funds from the State
Logistic Agency (Bulog).
Market players ignored threats by Akbar's Golkar party to
withdraw support from the coalition Cabinet, the dealer said.
"If you ask me their threat is kind of childish," he said.
However he said players were keeping a close eye on where the
situation was heading to.
"If it starts to undermine legislators and the government's
work, then I fear sentiment will turn negative," he said.
Golkar has three ministers serving in President Megawati
Soekarnoputri's Cabinet and many said it was unlikely that
recalling them would seriously weaken the Cabinet.
However Megawati will have a problem if Golkar, the
legislature's second largest party, boycotts passing laws.
Legislators are rushing to pass a dozen new laws, including an
anti money laundering law that the government must pass before
signing a fifth deal with the International Monetary Fund (IMF).
A new deal with the IMF is expected to be signed this month.
The dealer estimated the rupiah would range between 9,900 to
10,100 this week.
As in the currency market, the outlook on the stock market is
equally bullish with some dealers attributing the trend to
confidence in the BCA sale.
The Jakarta Stock Exchange (JSX) Composite Index jumped to
475.11 points in trading last week, sharply higher from 452.16 a
week earlier.