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The
Jakarta Post, Jakarta
Thinning
U.S. dollar reserves and a global economic downturn
clouding the domestic outlook would likely confine
the rupiah at 10,000 against the dollar this
week amid possible waning intervention from
Bank Indonesia, an analyst said. PT Danareksa
Sekuritas's currency and stock analyst Feri
Latuhihin said he saw little hope for the rupiah
to recover from its current levels in the short
and medium term. "I would say the rupiah remains
stuck where it is, too much concern weighing
against it," he said over the weekend. Pessimism
persist as the market believes Indonesia's economy
is starting to feel the pinch of the global
slowdown, according to him.
He said falling exports and foreign investors
losing interest in state assets marked the fallout
from this downturn. "The government's actions
to anticipate the external impact are starting
to look doubtful," he added. Coordinating Minister
for the Economy, Dorodjatun Kuntjoro-Jakti promised
actions, but was not planning or discussing
them until this week. Seeing the rupiah doomed
at the 10,000 level, Bank Indonesia would unlikely
step up its intervention moves, Feri continued.
In contrast, when the rupiah breached the 10,000
earlier this month, heavy intervention managed
to pull up the unit back to 9,000 territory
several times, he said. "Now they (Bank Indonesia)
prefer to reserve their foreign reserves, fearing
sentiment would not improve on the rupiah,"
he explained.
On the positive side, he said, the market expected
a smooth annual meeting of People's Consultative
Assembly (MPR) this week. "There isn't much
of security or political worries that may affect
the market ahead of the MPR meeting," he said.
But of another concern, he added, was the war
in Aahead of the MPR meeting," he said.
But of another concern, he added, was the war
in Afghanistan. "Will it last throughout the
Ramadhan month? This has the potential of triggering
security troubles at home," he said. Feri said
the market feared resurging anti U.S. rallies
in reaction to continued fighting against Afghan
Muslims during Islam's holy month. Another downside
factor was the government dragging on its privatization
program. It impeded the inflow of dollar supply,
and undermined the government's credibility
before foreign investors, he said. A decision
to delay selling state cement company PT Semen
Gresik to Mexican firm Cemex SA de CV added
to negative market sentiment.
Last
Friday, the rupiah closed at 10,253 down from
10,085 a week before. Feri estimated a range
of between 10,200 to 10,300 for this week. Meanwhile,
the stock market's past few weeks rally started
to lose steam with index ending a notch down
at 387.82 last Friday. It stood at 387.85 a
week earlier. According to Feri, the stock market
index was hurt by the delay in Semen Gresik
sale, which was postponed to December. Another
analyst, Edhi S. Widjoyo of PT Ciptadana Securities,
concurred, adding that otherwise trading had
been flat. For this week, he estimated continued
flat trading that would see the index settled
at around 380 points.
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