Tight rupiah trading for this week
Berni K. Moestafa, The Jakarta Post, Jakarta
Speculators easing up on the rupiah amid continued corporate dollar buying, might cram the rupiah into a trading band of between 10,500 to 10,700 against the U.S. dollar this week, according to a currency analyst.
Director at PT Bank Buana Indonesia, Pardi Kendy said corporate demand would drive the rupiah's movement this week,
"In the past two weeks trading has somewhat slackened, there hasn't been anything "bombastic" to spur the market," Pardi told The Jakarta Post over the weekend.
According to him, with few clues to trade on, most speculators would remain on the sidelines this week.
The presence of the International Monetary Fund's (IMF) review team in Jakarta received little market attention, he said.
The team, which arrived here last week, is reviewing the government's progress in complying with reform targets under the Letter of Intent (LoI).
They also started discussions with the government on new targets to be included in the upcoming fourth LoI.
One of the current LoI targets is the sale of PT Bank Central Asia (BCA) this year.
Pardi said conflicting statements from government officials on meeting the target had weakened market's interest in the sale.
Government officials have aired different opinions on whether they could meet the LoI target and wrap up BCA's sale this year.
Pardi said hopes that the sale would inject fresh dollar supply and revitalize foreign investors' confidence had also dimmed, since most BCA bidders were local investors.
On the political side, the war in Afghanistan remains out of market' attention, despite Indonesia's possible involvement through a peacekeeping mission.
"For this week, the market has no focus yet; we'll have corporate demand leading," Pardi explained.
He estimated that pressure on the rupiah would ease in the weeks to come as corporate demand for the dollar abates.
He said importers preparing for a surge in consumer spending during the festive seasons in December had made their purchases this month.
While foreign debt payments would extend to next month, it was unlikely they would grow significantly, Pardi added.
"So if the central bank wants to intervene in the money market, this would be the right moment," he said.
Bank Indonesia has been refraining from spending too much on lifting the rupiah, restricting its measures to keeping the unit stable.
In the weeks ahead, Pardi estimated the rupiah to remain range bound at between 10,400 to 10,800 against the greenback.
But if last week's lackluster trading continues, the local unit might trade at between 10,500 to 10,700, he added.
Last week, the rupiah closed Friday trading lower at 10,618 compared to the previous week's closing at 10,345.
Elsewhere, the Jakarta Stock Exchange (JSX) Composite Index edged up to 378.67 in last week's closing, from 377.34 the week before.