Rupiah to slightly strengthen

The Jakarta Post, Jakarta

The rupiah is expected to slightly strengthen this week due to positive sentiment as the market sees the prospects of an Iraq war fading on the back of rising opposition to the U.S. plans to attack Iraq, an analyst said.

Panji Irawan, a currency analyst at Bank Mandiri, said on Sunday that massive street rallies around the world rejecting a war had helped ease, at least for the present, the global market's fears over the possible outbreak of war in the Middle- East.

"The market sees greater chances of no war, which is positive for the world. We can see now that opposition to the war is not only coming from street rallies, but also from inside the UN," Panji told The Jakarta Post, referring to last week's session of the UN Security Council which rejected the U.S. proposal for an attack on Iraq.

Panji predicted that the rupiah would hover at around 8,900 per dollar within a range of between Rp 10 and Rp 30.

Last week, the rupiah ended the Jakarta market's four-day trading at 8,930 against the U.S. dollar, down from 8,870 a week earlier.

However, Panji cited the rising tension between South Korea and North Korea as a possible threat that could dissipate the current positive sentiment. Relations between the two Koreas have been tense lately following North Korea's move to resume its nuclear program.

"If this continues, the whole region will be affected, including Indonesia."

In the stock market, the Composite Index will have a tough task to break through the 400 level as investors would continue to wait on the sidelines for new developments in the Middle-East, a dealer said.

"As long as there is no certainty in the Gulf, the index will not move far away from the current level," a stock dealer at a Jakarta-based brokerage told the Post.

The index closed last week at 399.52, up 1.2 percent from the previous week, which ended at 394.63 points.

Last week's daily volume averaged 174.5 million shares valued at Rp 205.8 billion, compared to 172.34 million shares valued at Rp 179.7 billion the week before.