Rupiah likely to remain steady after last week rally: Analysts
Rupiah likely to remain steady after last week rally: Analysts
The Jakarta Post, Jakarta
After a sturdy rally that saw the rupiah almost break through
the Rp 9,000 level against the dollar last week, the local unit
will likely remain at present levels in the absence of central
bank intervention and on stronger dollar demand, analysts said.
State-owned Danareksa Securities currency and stock analyst
Ferry Latuhihin said it was unlikely that the rupiah would break
through into 8,000 territory despite positive market sentiment
overall.
"Bank Indonesia is interested in not only keeping the rupiah
strong, but keeping it stable as well," Ferry said. "For now, the
central bank is satisfied with keeping the rupiah at its current
level, which will reduce its volatility."
Last week, the rupiah made a run for 8,000 territory for the
first time since the Oct. 12 Bali bombing sent it nose-diving to
9,300 against the U.S. dollar.
Between mid-October and earlier this month, the local unit
stabilized at around 9,200 to the greenback. But over the past
six trading days, the rupiah reversed its earlier losses to end
last Friday's trading at 9,035, down from 9,195 a week earlier.
Analysts have attributed the sharp gains to local companies
purchasing the unit to pay rupiah holiday allowances ahead of
Idul Fitri and Christmas next month.
Moreover, Ferry said, the rupiah was benefiting from a weaker
dollar vis-a-vis regional currencies. The dollar came under
pressure as a result of the U.S. Federal Reserve cutting its key
rates, which have renewed concerns about the speed of America's
economic recovery.
On the domestic front, the local unit has been benefiting from
progress in the Bali bomb probe, which, according to Ferry, had
satisfied market expectations.
"It (the probe) has been sending good signals to the market,
showing that the authorities have become serious in dealing with
terrorists," he said. "If this trend continues, it'll definitely
be helpful for the rupiah."
Another analyst also shared Ferry's view, predicting that
returning strong corporate dollar demand would peg the rupiah at
current levels.
"Over the past couple of weeks, the rupiah has been moving
relatively steadily. The trend will likely continue this week
unless some news, either good or bad, emerges and stirs market
reaction," the analyst at a local bank said last Friday.
Both analysts, however, added that news of the recent sale of
a 51 percent stake in Bank Niaga to a Malaysian investor had done
little to bolster the rupiah.
The Indonesian Bank Restructuring Agency (IBRA) sold its stake
in Bank Niaga to Malaysia's leading financial group, Commerce
Asset-Holding Berhad (CAHB), for Rp 1.05 trillion (about US$116
million). CAHB is expected to pay the purchase price by Monday of
next week,
While positive news like the Bank Niaga sale has eased
pressure on the rupiah, it would not be enough to outweigh market
demand for the dollar, the analyst said.
"Importers would start gathering dollars to import goods to
meet rising demand for consumer goods ahead of Lebaran," he said,
referring to the post-fasting month holiday.
Companies with foreign debts are also seen eying the dollar
for debt repayments toward the year's end.
On the stock market, the Jakarta Stock Exchange Composite
Index (JSX) will likely remain buoyed by the nine-month high
earnings of state telecommunications company PT Telkom, according
to a stock dealer.
"Telkom's news, coupled with regional market movements, will
drive the index up. But the increase will not be as much as last
week," she said, adding that global markets have reacted
positively to Iraq's willingness to accept a United Nation's
resolution on arms inspection.
Telkom's nine month net profit more than doubled to Rp 7.57
trillion over the same period last year. This, however, was
primarily due to its sale of a stake in its cellular phone unit
to a Singaporean investor.