'Rupiah to remain at 9,000 this week'
The Jakarta Post, Jakarta
After hitting Rp 9,000 to the U.S. dollar again last Monday, the rupiah is likely to stay there in this week's trading one analyst said, citing continued foreign debt payments and concerns over of a prolonged, weak U.S. economy.
Bank Mandiri chief economist Martin Panggabean predicted the rupiah would weaken towards the end of the year on pressure from foreign debt payments, but might return to the 8,000 level temporarily.
"The rupiah's drop to 9,000 is about two months too early," he said on Friday.
Traders should watch the movements of major currencies against the U.S. dollars, as these would determine the direction the rupiah would be heading for, he said.
"Will the dollar crash? If so, there is potential for a stronger rupiah."
The dollar may get hit by concerns over the U.S. economy. As prospects on American stocks remained dim, and as the U.S. budget deficit swelled dangerously, the greenback was at risk, he said.
Under this scenario, Martin said the rupiah was poised to gain and return to the 8,000 level. "But even if it does, it'll be temporary."
Despite signs of the U.S. economy rising from its slump, a slew of accounting scandals hurting Wall Street, and war talks in the Middle East have delayed the expected lift in the global economy.
The government is counting on an improved global economy during the second semester, in hope for better export sales toward the end of this year.
Last Monday the rupiah slid for the first time in six weeks to the 9,000 level mainly due to outside pressure. Japan's yen was trading lower to the dollar, dragging with it regional currencies including the rupiah.
Concerns of a U.S. attack against Iraq also rose while at home the weakening JSX index prompted currency players to buy dollars in case foreigners sold off Indonesia shares.
Bank Indonesia said it would defend the rupiah through market intervention among others, yet only if its fall was too steep. The central bank has a policy of intervening but never disclose specific intervention volume.
On Friday, the rupiah ended trading way down at 9,030 from 8,965 a week before.
The Jakarta Stock Exchange (JSX) index would likely stay at around 400 this week, said stock analyst Hengky Sumarli.
He said stock prices are reasonable at these levels as the JSX index has fallen for several weeks now.
"That (400 points) will be the next support level," he said, reasoning also that the index began this year at around 390.
The JSX index closed Friday trading at 408.79 points, significantly lower from last week's 421 points and around 427 in early September.
Analysts said recent reports of the suspected presence of terrorists in Indonesia had dampened stock investors appetites, since action against them might provoke a backlash among hardliners here.
But Hengky said that security was for now a minor concern.
"Next week trading will depend more on how developments are outside," Hengky added. "If global markets weakened this won't spur well for the JSX."
He said a plunge of the U.S. Dow Jones Index may drag the JSX to below the 400 level.