Rupiah to stabilize, stocks to soar further, say analysts
Rupiah to stabilize, stocks to soar further, say analysts
The Jakarta Post, Jakarta
The rupiah, having weathered a huge shock last week following
the latest bomb attack in the country, is likely to move within a
narrow range this week with pressures slowly dwindling, analysts
said on Sunday.
The local unit closed on a positive note last week at 9,280
per dollar after dropping to above 9,400 the day earlier just
after the bombing. In the previous week, the rupiah ended at
9,278 a dollar.
"For this week, with the panic over, the rupiah I think will
hover at relatively the same level," Farial Anwar of Currency
Investment Management said.
"Also, this week is the last week before the election runoff,
which would most likely keep investors -- except for speculators
-- on the sidelines, applying a wait and see approach.
"That will keep the pressure off the rupiah. My prediction is
that -- assuming that nothing extraordinary happens -- it would
hover at around the 9,250-9,350 level," Farial told The Jakarta
Post.
The election day, which will see President Megawati
Soekarnoputri facing Susilo Bambang Yudhoyono for the 2004-2009
presidential term, is scheduled for Sept. 20.
A powerful bomb went off on Thursday in front of the
Australian Embassy, which killed nine people and injured 180
others -- leaving the financial market in limbo on panic selling
afterwards.
But, the rupiah staged a quick recovery the following day on
optimism that police would be able to quickly solve the case and
that the attack would not undermine the economy or sabotage the
forthcoming presidential election.
Another analyst, who works for a foreign bank in Jakarta,
echoed Anwar's forecast.
"Although I do not see any reason for the rupiah to
strengthen, I do not expect it to weaken either. The dollar
factor, which is unlikely to strengthen against other major
currencies, will also help," he told the post.
"I thing a movement of more than Rp 200 will be very
unlikely."
While the rupiah is expected to be stable, the stock index is
predicted to maintain its upward trend with dealers betting the
index to breach the 800-point level.
The index soared to its highest level in four months on
Friday, defying concerns that the bombing would further impede
the country's economic recovery.
The index dropped 4 percent right after the blast, but
regained ground to close 0.8 percent lower on the same day.
It ended at 797.78 points last week, up by 1.4 percent from
the previous week, with average daily transaction valued at Rp
1.08 trillion (US$116.41 million) as against Rp 865.07 billion
the week before.
"We expect the index to surpass the 800 point level this week
on further rebound," one stock dealer said, adding that investors
would likely seek gains from undervalued banking shares.