Rupiah to strengthen, stock market to weaken
Rupiah to strengthen, stock market to weaken
Zakki Hakim, The Jakarta Post, Jakarta
The rupiah is expected to continue appreciating against the U.S.
dollar this week, a currency analyst has said.
Farial Anwar of Currency Investment Management told The
Jakarta Post on Sunday that people would need more rupiah to
purchase government bonds and the assets shortly to be sold by
the Indonesian Bank Restructuring Agency (IBRA).
IBRA is planning to sell a majority stake in Bank Danamon
soon.
The rupiah last week ended at a nine-month high of Rp 8,725
per dollar.
"We expect a firmer rupiah this week," Farial said.
The upcoming 2004 general election, and the threat of wars in
Aceh and in Syria would not affect the country's currency too
much as this year the market was maturer than in previous years,
he said.
"As we have seen over the past weeks, the market's relatively
calm reaction to the Iraq war and the outbreak of Severe Acute
Respiratory Syndrome (SARS) proves that it is more mature now,"
Farial said.
But he said that the appreciating trend could be limited by
negative sentiment on the stock market, which might force people
to seek dollar-based investment alternatives.
Zulfikar, an analyst with securities firm PT Mandiri
Sekuritas, told the Post that the Jakarta Stock Exchange
composite index would likely drop this week on profit-taking.
Last week, the index ended 1.2 percent higher at 443.85
compared to the previous week's close of 438.55 on the back of
positive sentiment resulting from the end of the Iraq war.
But he said that bluechip stocks were now relatively
expensive, thus putting pressure on the stock market.
"We are expecting a drop in the index this week because the
prices of blue chip stocks are high enough for investors to
sell," he said.
After gaining profits on the stock market, most investors will
switch their investments to other alternatives, such as bond-
based mutual funds, which promise more certainty and higher
yields due to their tax-free status, he said.