Rupiah to ease slightly by year-end, says poll

Rupiah to ease slightly by year-end, says poll

SINGAPORE (Reuter): The Indonesian rupiah is expected to decline slightly by the year-end with a Reuter poll of 12 analysts and foreign exchange dealers in Jakarta and Singapore producing a median prediction of 2,965 to the dollar.

At 0530 GMT the rupiah was quoted was quoted at 2,890/2,910.

The poll was conducted on a non-attributable basis as traders and economists have become increasingly reluctant to provide forecasts on the record after Malaysia's threats that it could use harsh security laws to silence critics of its economic policy.

Most of the those polled expected the rupiah to range between 2,900 to 3,000 to the dollar, but the median result of the poll does not include the highest estimate of 3,400 or the lowest of 2,725.

When these estimates are included, the poll produced an average expectation of 2,995 to the dollar.

"I think the rupiah at 2,900 level should be reasonable by the end of the year, considering the fact that we are heading for a Presidential election," one U.S foreign bank dealer in Jakarta said.

He said although people did not expect any surprise from the election, but there could be some anticipation.

"Otherwise if things are calm, the rupiah could strengthen further. Others have even higher expectation for the rupiah."

Another American bank dealer said he expected the rupiah to range around 2,950/3,000 by year-end because of possible profit- taking from long rupiah positions.

"Historically the underlying tone on dollars is a bit bullish at year-end," the dealer said.

"Offshore parties are gradually establishing long outright positions now which I expect to be partially liquidated at year- end to show their performances," the dealer added.

"I think the level between 2,950 and 3,000 should be a good level at year-end," the dealer added.

A trader at a European firm in Singapore said he thought a level around 3,000 was realistic.

"The region will obviously remain highly nervous and currencies will be prone to test the downside," he said.

"But Indonesia still offers investors a highly attractive yield and I think that'll help underpin the currency," he said.

However, the exotic currency trader at a European bank who forecast the rupiah would fall to 3,400 by the year-end was not so optimistic.

"It's not over for Southeast Asia yet by any means. I reckon we'll have a period of consolidation and then the regionals -- not just the rupiah -- will start heading south again," he said.

The central bank effectively floated the rupiah on Aug. 14 after removing its intervention band, the parameters outside of which it had intervened in the market. The rupiah has hit several historic lows against the dollar since then, most recently 3,070 on Aug. 29.