Rupiah poised to gain more: Analyst
Dadan Wijaksana, The Jakarta Post, Jakarta
The rupiah got off to a record-high level against the U.S. dollar last week, with analysts expecting the bullish trend to continue this week amid lingering bright sentiments.
Last Friday, the rupiah surged to 9,835 against the greenback, its highest closing this year due in part to suspected late dollar selling by the Indonesian Bank Restructuring Agency (IBRA).
Currency and stock analyst at Danareksa Research Institute Ferry Latuhihin predicted the rupiah would remain stable with good chances of further strengthening.
"The volatility of the currency has been very low lately, thanks to growing confidence among market players," Ferry told The Jakarta Post over the weekend.
He said the rupiah could likely test the 9,800 level in trading this week.
Contributing to the rupiah's push had been the country's relative stable political and economic outlook, with no major security threats weighing down on the unit as happened last year.
The confidence rush from the recent sale of the country's largest private bank, Bank Central Asia (BCA) helped cement the rupiah's path upward, he added.
BCA was sold to a consortium led by the U.S. investment firm Farallon Capital Management in a deal worth some Rp 5.3 trillion (about $530 million).
The government expects Farallon to pay out the first installment by March 28, which traders said turned the market somewhat dollar bearish.
Players anticipate Farallon will inject a fresh dollar supply of roughly $300 million by next week's deadline to pay for the the first 30 percent stake in BCA of the total 51 percent it acquired.
The Indonesian Bank Restructuring Agency aims to sell more banks, with Bank Niaga having already attracted a mix of 20 foreign and local investors. Next on the list are Bank Danamon, Bank Lippo and Bank Internasional Indonesia (BII).
A dealer with a foreign-based brokerage was also upbeat on the rupiah's outlook, but warned the country's foreign debt overhang remained a major drag on the local unit.
"The rupiah will rise gradually. Don't expect jumps, there is continued pressure from payments of foreign debt," he said.
The latest data showed sovereign debts at around US$130 billion. This year's state budget allocates nearly Rp 44 trillion on foreign debt payment, but also aims to reschedule some of it through a Paris Club accord.
The government is slated to meet sovereign creditors under the Paris Club next month, to seek a debt rescheduling of between $5 billion to $6 billion for the fiscal year until 2003.
Finance minister Boediono visited several Paris Club member countries last week to seek their support.
The outcome has yet to be disclosed. There is some fear of lenders denying Indonesia access to higher rescheduling amounts, as Indonesia has been lagging behind in reform targets.
But confidence in the rupiah remained strong nonetheless, as was also visible in the stock market, Ferry went on.
Last week, the Jakarta Stock Exchange Composite Index edged up 3.6 percent, or 16.741 points, to close at 484.732, versus 467.99 points the week before.
The index may test the 495 level this week, according to one dealer at a local security firm.
"Trading this week will remain active, with buying of blue chips shares. First, the market will try to break 495, and then maybe 500," he said.
The market, he said, was expecting good news from the slew of annual reports to be released this week, among them from state- run cementmaker PT Semen Gresik.