Mon, 17 Sep 2001

Rupiah, shares seen to remain stable this week

JAKARTA (JP): Indonesian currency and shares are expected to remain stable this week despite concerns over the United States' economy and potential global recession following the terrorist attacks on the superpower's financial center last week, analysts said.

Currency analyst Farial Anwar said the rupiah had stabilized enough so that even major turmoil outside the country, such as the terrorist attacks on the World Trade Center, put little pressure on the currency.

Farial predicted on Saturday that the rupiah, which has been relatively stable over the past two weeks, would hover between Rp 9,000 and Rp 9,200.

Despite the fact that major currencies, including the euro and yen gained strength against the dollar in the wake of the U.S. attack, the rupiah remained stable last week. On Friday, the currency closed slightly stronger at Rp 9,100 in light trade compared to Rp 9,130 the day before.

"I'm beginning to see that the currency has reached a stable support wedge for the time being which should continue for the week ahead," he told The Jakarta Post.

He noted however that traders would be anxious to see how the New York Stock Exchange will go on Monday after a four-day shutdown and the U.S. government's response to the attacks.

Farial however, warned of the grave impact on the global economy in the wake of retaliatory action taken by the U.S. against those responsible for the attacks.

Reports have said that the U.S is preparing to attack Afghanistan, which is believed to be the hideout of Osama bin Laden who is accused of being responsible for the killings.

"If America attacks Afghanistan or other countries in the Middle East without sound evidence that they collaborated with the terrorists, it will definitely trigger a full-scale multidimensional crisis of international proportions," Farial explained.

"We can imagine what would happen next. No investors would then be willing to invest in the already isolated Indonesian market for fear of revenge as Indonesia is the largest Moslem country in the world."

"Let's just hope that's not going to happen," he said.

Meanwhile, the Jakarta Stock Exchange (JSX) Composite Index closed lower on Friday at 425.65, as against 443.81 the week before.

Stock analyst at BNI Securities Adrian Rusmana blamed the attacks on New York and Washington as the reason behind the slight decrease in the index.

"The index was heading in the right direction when the attacks took place.

"If it were not for the attacks, the Composite Index would have closed much higher than 425.65," Adrian said on Saturday.

However, Adrian said he was optimistic that stock markets would rebound immediately after the U.S market resumes operations on Monday.

"And I do not think America will launch attacks an any groups or countries without proof that they are involved in the terrorist attacks. World opinion will prevent that," he reiterated.(10)