Rupiah to stable, index to recover some ground this week: Dealers
Rupiah to stable, index to recover some ground this week: Dealers
The Jakarta Post, Jakarta
The rupiah is expected to remain stable this week on
decreasing pressure from the U.S. dollar and rising optimism over
the country's economy, a dealer said.
The rupiah closed at 8,540 per dollar last week, slightly
lower than the previous week's close of 8,520. This, according to
a currency dealer at a foreign bank, marked the return of
confidence in the local currency, which lost much ground two
weeks ago on the back of the U.S. dollar's rise against regional
currencies.
"With the pressure from the dollar easing, investors are now
looking at the macroeconomic fundamentals again. Recent positive
shows on the inflation and export fronts provide the latest
evidence that our fundamentals remain sound," he told The Jakarta
Post.
The Central Statistics Agency (BPS) reported last week that
inflation continued to ease with the July consumer price index
rising by only 0.03 percent from June, bringing the January-July
inflation figure to a mere 1.29 percent, compared to the
government's full year target of 9 percent. On an annualized
basis, the inflation rate stood at 5.79 percent in July, lower
than the 6.62 percent recorded the previous month.
More encouraging news was that exports in June jumped to a
three-year high of US$5.28 billion.
Higher revenue from exports means that companies will have
more financial resources to expand production, and this in turn
could lead to more jobs.
"Also, a good export performance means higher international
reserves on our side, providing Bank Indonesia with enough funds
to safeguard the rupiah," the dealer said.
The country's international reserves currently stand at around
$34 billion.
Adding to the positive sentiment is the expectation of capital
inflows from investors eyeing local assets offered by the
Indonesian Bank Restructuring Agency (IBRA).
IBRA is expected to soon launch tenders for a number of assets
formerly owned by the country's business tycoons and
conglomerates, including the Texmaco Group.
"All these will support the rupiah in stabilizing at the
current level, with a tendency to strengthen," he added.
A stable rupiah would help the index rebound from its two-week
fall, according to a stockbroker with a local brokerage firm.
"A stable rupiah will provide a good chance for the index to
stage a recovery from its slump over the last two weeks. I think
a level in the 510s will be achievable this week," the broker
said.
The Jakarta composite index ended at 508.70 last week, down
0.2 percent from the previous week.
"The rupiah has now stabilized. There is no reason for the
index not to get back on its upward trend in the near future,"
she added.