Rupiah, stocks to be flat this week
Rupiah, stocks to be flat this week
The Jakarta Post, Jakarta
The rupiah is likely to maintain the familiar range of between Rp
9,250 and Rp 9,350 per U.S. dollar this week as investors
continue to maintain a positive view on the country's economic
outlook, analysts predict.
Ferry Latuhihin, currency and stock market analyst at PT
Danareksa Securities, said that although overall sentiment in the
local unit remains positive, the absence of market stimulus would
limit the rupiah's upward movement.
"Short-term equilibrium, that's the right term for the rupiah.
It would continue to hover at a range of Rp 9,250 to Rp 9,350 for
this week," Ferry told The Jakarta Post over the weekend.
The local currency has been moving at that level for the past
couple of weeks, despite the lack of positive news.
Last week, the rupiah closed a bit higher in four-day trading
at Rp 9,290 against the dollar, compared to Rp 9,310 the week
before.
After appreciating sharply against the American greenback
since January, thanks to increasing investor confidence in the
country, concerns have been rife that profit taking, coupled with
the absence of market stimulus, would eventually stall the
rupiah's current ground on the dollar.
Since early this year, the government has succeeded in
creating a positive sentiment among market players by
successfully achieving a number of economic reform targets.
Positive news which has been buoying the market includes the
successful sale of Bank Central Asia, a $5.4 billion debt
rescheduling deal with the Paris Club of creditor nations, and
the disbursement of the International Monetary Fund $340 million
loan tranche.
Analysts say that investors were now waiting for the
government's next asset sale and privatization program. If these
programs are implemented successfully, the rupiah will get
another boost.
"Confidence in the rupiah will remain strong on a better
outlook for economic prospects in the country," said a dealer at
a foreign-based brokerage over the weekend.
He said that the market was waiting for good results from the
sale of government shares in Bank Niaga, and state-owned
telecommunication firm PT Indosat.
The government is planning to sell a 51 percent stake in mid-
sized Bank Niaga, and 15 percent in Indosat. The asset sales are
expected to be completed in June.
Other banks planned for sale this year include the giant
state-owned Bank Mandiri and nationalized Bank Danamon.
The inflow of foreign funds to buy local assets would
contribute positively to the exchange rate of the rupiah,
analysts said.
Turning to the stock market, a dealer expects the Jakarta
Composite Index to remain flat throughout this week as players
apply a wait-and-see stance.
"Trading would remain active, but I think the index movement
would not be far from last week's," a stock dealer at a local
bank predicted.
The Jakarta Composite Index closed the week at 0.178 points,
or 0.03 percent lower over the previous Friday at 543.91.
Ferry concurred, saying: "Day to day fluctuation is likely to
happen, but overall it would not be far from last week, the index
still has a good chance of moving upward."
Daily volume averaged 956.375 million shares valued at Rp
492.91 billion ($53.08 million) compared to the previous week's
873.03 million shares worth Rp 464.64 billion.
Shares in state-owned telecommunication firm PT Telkom closed
the week flat at Rp 4,275. Cigarette maker Sampoerna lost Rp 200
over the week at Rp 4,450 while rival Gudang Garam also dropped
Rp 200 to Rp 11,550.