'Rupiah will continue to climb'
'Rupiah will continue to climb'
Dadan Wijaksana, The Jakarta Post, Jakarta
Impressed by the strengthening of the rupiah last week,
analysts expressed confidence that the local currency would
continue to climb next week.
The rupiah closed last week at Rp 10,110 against the U.S.
dollar, up from Rp 10,180 the week before.
Since the start of this year, the rupiah has been gradually
gaining more and more ground against the dollar, but last week's
closing was definitely the strongest since December.
Currency analyst Farial Anwar from PT Currency Management
Group attributed the slow-but-sure upward movement of the rupiah
to Bank Indonesia's relatively better handling of monetary
affairs to maintain a positive investment climate.
And now that the market is still full of positive sentiment,
especially with the progress of much-observed Bank Central Asia's
sale process, Farial believed the rupiah's upward trend would
continue this week.
"The rupiah is expected to remain stable this week, with a
tendency to strengthen slightly," he said over the weekend,
adding that the local currency would be hovering within a narrow
range of Rp 10,000 to Rp 10,200.
The rupiah would still be bolstered by expectations of capital
inflows from the sale of BCA, which was the country's largest
retail bank.
Another analyst, Wiwan Wiradjaja, also stressed the importance
of a success story for BCA, saying it would spur the appetite for
investment here.
The crucial divestment process of BCA is now entering its
closing stages, with the winning bidder scheduled to be announced
this week.
The sale would also be decisive in term of securing debt
relief from the Paris Club of creditor nations, with which
Indonesia is scheduled to meet in April.
Indonesia has some $130 billion in public debt, or more than
last year's entire gross domestic product.
Two surviving candidates, consortiums led by a U.S. investment
firm Farallon Capital and U.K.-based Standard Chartered Bank
Plc., will fight it out to gain control of the bank.
But complaints this week from Farallon may stall the sale
process and put the Paris Club debt rescheduling at risk, thus
creating negative sentiment in the market.
Farallon has complained the bidding procedure is unfair, as
the Indonesian Bank Restructuring Agency (IBRA), which is in
charge of the process, allowed other bidders to revise their
terms and conditions, even after the submission deadline.
Wiwan further said that traders would try to test the rupiah's
psychological level of Rp 10,000, although he doubted the move
would be effective.
Wiwan warned that the local unit would be weighed in by
dollar-buying by corporations to repay their maturing debts, but,
he went on, its impact would be insignificant.
"Overall, the rupiah is tending to strengthen against the
dollar, although it will not be too drastic," he told The Jakarta
Post over the weekend.
Aside from domestic sentiments, both analysts agreed the
rupiah's movement had been, and would continue to be, spurred by
stable currencies in the region.
Meanwhile in the stock market, the Jakarta Composite Index
would this week likely be back on its upward trend following a
drop from last week.
Last week, the index declined on the back of heavy profit-
taking to close at 452.16 points, or down from 459.38 points.
The drop was a result of active selling of blue chip shares,
led by foreign investors, who have been the prime mover of the
index for the past months.
Shares of leading companies such as Astra International and
BCA, which had posted gains from the past three weeks of trading,
were among the hardest hit.
However, some traders were of the opinion that a technical
rebound would push the index higher this week.