Rupiah, stocks to get firmer: Analyst
Dadan Wijaksana, The Jakarta Post, Jakarta
The rupiah is expected to move stronger against the U.S. dollar this week amid lingering positive news both from home and abroad, with the completion of the sale of Indosat being the latest impetus for a continued strong rupiah, analysts said.
Ferry Latuhihin, currency and stock analyst at Danareksa Sekuritas, said that the Indosat sale would provide positive signals to the financial market as the government pushed ahead with its economic reform program.
"This is good news for the market and will put further pressure on the already bearish dollar. The rupiah will likely be pushed to the 8,800 level this week, with chances of getting even stronger," Ferry told The Jakarta Post on Sunday.
On Sunday, the government announced it had signed a sale and purchasing agreement with Singapore Technologies Telemedia (STT) as the new holder of a 41.9 percent stake in the state telecommunications firm.
STT, owned by the Singaporean government, purchased the stake at a price of Rp 12,950 per share for a total of Rp 5.6 trillion (US$610 million).
As the Singapore investor needs to convert its currency to the local unit to make payment, strong demands for the rupiah will be reflected in this week's trading.
This, coupled with the recent rally in regional currencies against the greenback, Ferry added, means the rupiah has a good chance of strengthening this week.
The local currency in last week's three days of trading managed to close slightly higher at 8,875 per dollar compared to 8,980 the week before, owing partly to the global trend that saw the U.S. dollar weaken against almost all regional currencies.
Another currency analyst, Panji Irawan, also painted a bright outlook for the local unit, sharing the same view as Ferry that the sale of Indosat would trigger more demands for the rupiah.
Panji said that the sale came on top of other positive news, including the sale of assets under the Indonesian Bank Restructuring Agency (IBRA), the government's plan to issue bonds, which would further bolster the rupiah.
The government plans to issue some Rp 2 trillion in new bonds, aimed at replacing old ones due to mature at the end of the year.
Echoing Ferry, Panji was also convinced that external issues would favor the rupiah's performance.
"The bearish mood (of the dollar) is likely to continue as markets are still uncertain about the progress of the U.S. economy following a shake-up in the U.S. Cabinet," Panji told the Post.
These factors, he went on, could enable the rupiah to go all the way to the 8,500 level by the end of the year. "Pessimistically, the rupiah would only reach 8,750."
Euphoria over the Indosat sale is likely to be reflected in the stock market, possibly pushing the Jakarta Composite Index to surpass the 400 point level.
"If this sentiment continues, it is not impossible that the index will break 400 points this week," Ferry said.
Apart from ST Telemedia, the other shortlisted bidders are Telekom Malaysia Bhd., Desa Mahir Sdn Bhd. -- a unit of Malaysia's Maxis Communications Bhd. -- and Gilbert Global Equity Capital Asia Ltd.
Last week, the index ended at 391.22, lower than the 397.08 of the previous week.
Last week's daily volume averaged 293.42 million shares valued at Rp 302.66 billion compared with the previous week's 318.5 million shares valued at Rp 299.7 billion.