'Paris Club to boost local market'
Dadan Wijaksana, The Jakarta Post, Jakarta
The rupiah will likely resist selling pressure this week, as confidence from last week's successful Paris Club meeting could shore the local unit to new gains, analysts said.
Last week's US$5.4 billion debt rescheduling deal with the Paris Club creditor countries would bring fresh air to market sentiments, which have been positive over the past weeks.
The deal puts back sovereign debt payments by over 18 years, and foreign development aid payments by over 20 years.
Market analysts Ferry Latuhihin and Wiwan Wiradjaja said prolonged positive sentiment would allow the local rupiah to force its way through to beyond 9,500 against the dollar.
"I think, the rupiah will try to test the 9,500 level on the impact of the successful meeting in Paris, but it (the movement) will not go too far," DBS Vickers analyst Wiwan said over the weekend, estimating the local currency would hover at a range of 9,400 to 9,600.
The rupiah has moved close to around 9,400 on a number of occasions but failed to break through that key psychological support.
Wiwan said that support had been thin at 9,400 but could have grown strong enough by now.
The local currency closed higher last week at 9,525 against the dollar, compared to 9,560 in the previous week.
Ferry, currency and stock analyst at Danareksa, also predicted a stronger rupiah this week.
Optimism over the country's efforts to speed up the sale of assets, including Bank Niaga, might spur the rupiah's rise, both Ferry and Wiwan agreed.
The Indonesian Bank Restructuring Agency (IBRA) said last week it would announce the names of bidders for a 51 percent stake in PT Bank Niaga, as part of a divestment process the government hopes to finalize by June.
As in the sale of Bank Central Asia (BCA), Bank Niaga is seen attracting foreign cash, which could again bolster confidence in the rupiah.
The country's image before investors was given a boost as the government successfully completed the sale of BCA to a foreign consortium led by U.S investment firm Farallon Capital Management after nearly two years of efforts.
Ferry said the stock market would see some buying among second-liners stocks, that could lead the index to new gains.
Last week, the Jakarta Stock Exchange Composite Index jumped by almost six percent to close at 539.27 points from 509 the week before. The latest rise sums up to nearly 40 percent in gains made since early this year by the Jakarta stock market.
The past weeks' bullish mood was underpinned by exchange rate stability, falling interest rates, and progress in the sales of banking shares.
"Since prices of most of the blue chips' shares are already approaching their fair-values; players would turn to second- liners," Ferry added.
In last week's trading, market heavyweight telecommunication firm PT Telkom ended down Rp 200 at Rp 4,475. Its peer PT Indosat was up Rp 2,450 at Rp 13,400.
Cigarette maker PT Gudang Garam rose Rp 750 over the week to Rp 11,850 and rival PT Sampoerna closed Rp 50 rupiah lower at Rp 4,525.
Last week, daily volume averaged two billion shares valued at Rp 1.352 trillion ($141.87 million) compared to the previous week's 1.468 billion shares worth Rp 704.9 billion.