Rupiah weak despite lift from IBRA
Berni K. Moestafa, The Jakarta Post, Jakarta Post
The rupiah this week will likely follow the same flat trading pattern as in recent weeks, on pressure from corporate demand despite U.S. dollar selling by the Indonesian Bank Restructuring Agency (IBRA), says one currency analyst.
PT Danareksa Securities' currency and stock analyst Feri Latuhihin said IBRA dollar conversions from its asset sales would do little to soothe pressure on the rupiah.
"I would say the dollar will remain bullish until next February," he told The Jakarta Post over the weekend.
IBRA is set to rake in some Rp 3 trillion (about US$288 million) in asset sales by December 13, according to its chairman I Gede Putu Ary Suta last week.
As of now, the agency has secured Rp 24 trillion out of this year's asset sales target of Rp 27 trillion.
In recent weeks the agency has finalized a number of sales, including that of chemical producer Sulfindo Group for $41.2 million.
IBRA converts the dollar proceeds into rupiah, which should give the local unit a boost. But Feri said the country's huge foreign debt overhang had capped any upswings in the rupiah.
Also routine dollar purchases from state power firm PT PLN and state oil company Pertamina could reach $40 million per month.
He added Bank Indonesia would unlikely intervene, knowing that it has no strength to topple the high dollar demand.
The market was also thin in supply, which implied that trading could be volatile, he added.
In his view, the rupiah would trade at between 10,300 to 10,500. IBRA asset sales last week helped lift the local unit to 10,385 from its 10,450 low a week before.
In the stock market, Feri predicted that the Jakarta Stock Exchange (JSX) index would move in a narrow band due to lackluster trading.
Deprived of foreign funds, the stock market was left with local investors who had been battered by depressing news at home, he said.
The government's lack of headway in selling state cement maker PT Semen Gresik, and graft allegations against House Speaker Akbar Tandjung and the likely protracted dispute, had dampened investors appetites, he said.
News of the government selling its stake in market heavyweight PT Telkom Indonesia failed to affect the market as its shares were suspended from trading.
The government announced last Friday it had sold 11.9 percent in Telkom, raising some Rp 3.12 trillion from the sale.
But the JSX suspended trading of Telkom's shares on Friday, as it awaited clarification from the government.
Last week, the JSX index ended down at 377.21 from 380.19 a week earlier. Feri predicted the stock market would hold its position at between 370 to 380 in this weeks trading.