Rupiah to remain stable this week

Rupiah to remain stable this week

Dadan Wijaksana, The Jakarta Post, Jakarta

The rupiah is expected to remain stable at its current level of
around Rp 9,000 per U.S. dollar this week after the Idul Fitri
holiday.

"The rupiah is likely to be stable this week within the range
8,959 to 9,000 in a thin market, with a trading volume under
US$200 million," director of Currency Management Group Farial
Anwar told The Jakarta Post on Monday.

He said that positive economic news both at home and overseas
would outweigh the negative news resulting from another bombing
incident last week in Makassar, South Sulawesi.

He said that the positive news could actually strengthen the
rupiah, albeit slightly.

Farial said the decision by the International Monetary Fund
late last week to disburse another loan tranche of US$365 million
to the country was a positive factor for the rupiah because it
reflected a vote of confidence on the progress Indonesia was
making in carrying out its promised economic reform programs.

Over the last few weeks, the rupiah had been hovering within a
narrow range, with last week's trade closing at 8,987 against the
dollar, compared with 8,975 the week before.

Another development that would benefit the rupiah was the
recent slide of the dollar against many regional currencies
following the resignation of U.S. treasury secretary Paul
O'Neill. In Asia, the news proved on Monday to have fueled heavy
dollar selling across the region.

On the domestic front, progress in privatization and the sale
of assets under the Indonesian Bank Restructuring Agency (IBRA)
would also prove beneficial to the local currency, Farial added.

The long-awaited truce between the government and the Free
Aceh Movement (GAM), signed on Monday, could pave the way to end
the decades-long bloody conflict and add to positive market
sentiment.

On the stock market, the Composite Index would continue its
bullish sentiment this week with chances of breaking the 400
level running high, according to an analyst.

"As overall market sentiment remains good, the index is still
on an upward trend toward year-end, with a strong possibility of
the index breaking the 400-point level this week," Jasso Winarto
of the Sigma Research Institute said.

Last week, the index managed to benefit from four days of
trading to close higher at 397.08, as against 390.42 the week
before, continuing its steady rise over the past few weeks.

Aside from a stable macroeconomic condition, the good
sentiment in the market should also be attributed to the news at
corporate levels, Jasso said.

Leading companies, including the country's largest automotive
maker Astra International, cigarette producer Sampoerna, state
telecommunications companies Indosat and Telkom, had performed
well during the year.

"Some of them have even posted all-time records in their
profits. It's those shares that will attract most investors,
which will, in turn, boost the index as a whole," Jasso added.