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Local stocks and the rupiah are expected to remain under
pressure this week from an almost certain hike in U.S. interest rates,
analysts said.
"Markets worldwide are 100 percent sure that the Fed will up its rate
again this week, and 60 percent sure of further hikes (in the future),"
economist Ferry Latuhihin of Bank International Indonesia told The
Jakarta Post on Sunday.
"This will put pressure on stocks, with trading remaining volatile and
fluctuating until at least October."
For the coming week, Ferry said Indonesia's benchmark Jakarta Stock
Exchange Composite Index is likely to slip again to the 1,250-point
range, with most shares moving down.
Budi Ruseno of Bhakti Capital, as quoted by AFP, said stocks would
likely trade mixed to lower. He said the market may test resistance at
1,333 points, with support seen at 1,245.
The index last Friday shed 13.286 points, or 1.02 percent, to
1,290.164. It ended the week on an overall loss of 19.361 points, or
nearly 1.5 percent, its second weekly loss in three.
Average daily volume was 1.024 billion shares worth Rp 1.024 trillion
(US$108.99 million dollars). Decliners led gainers 55 to 34, with 67
stocks unchanged.
The local market's slump was in line with similar trends in other
bourses in the region, whose trading over the week was jittery on
strong concerns about another Fed rate hike. Tokyo's Nikkei-225 and the
Hong Kong Hang Seng ended largely unchanged, but markets in Korea,
Taiwan, Shanghai, Mumbai and Singapore all closed on a loss.
The U.S. Federal Reserve is scheduled to hold its next policy meeting
on June 29, with economists forecasting another quarter-percent hike
from the current 5 percent rate, on unfavorable inflation data. Higher
rates may undermine the prospects of many publicly listed companies in
global markets that depend on the U.S. market, dampening investor
sentiment.
Other analysts pointed out that the markets may react to upcoming
second quarter corporate performance outcomes, as well as to continued
volatility in the rupiah.
Ferry saw the country's currency as likely to trade around Rp 9,500 to
the U.S. dollar, weakening again from last week.
The rupiah ended down 0.5 percent to Rp 9,405 on Friday, booking a
fifth weekly loss of 1 percent. The currency is affected by the
difference between the Fed rate and Bank Indonesia's local key rate.
Singapore-based economist Irene Cheung from ABN Amro Bank was quoted by
Bloomberg as saying that the rupiah will also be weighed down by a
decline in the local stock index, seeing a possible Rp 9,600 level in
the next two months.
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