JAKARTA: The Jakarta Composite Index (CSPI) has a potency to fall below the level of 3,800 if the exchange rate of rupiah against the US dollar continues to weaken.
Standard Chartered’s economist Fauzi Ikhsan saw the rupiah exchange rate is able to penetrate to IDR9,600 and will have major impact to the performance of the index in the Indonesia Stock Exchange.
On the other hand, the market condition is also increasingly vulnerable to the market condition following the Greek re-election on June 17. Greek crisis impact on other European countries like Spain and Italy are also exacerbating the market.
"The index depends on the value of rupiah. Currently there is no exporter wants to sell dollar so that the supply of dollars into the country is drying up, while we still have a need for dollars to repay debt or dividends," he said.
According to him, the growth of JCI in year-to-date was considered low compared with other countries in Asia. Fauzi recorded JCI’s current growth rate was only about 1% while China’s growth was 9%, India for 8%, Malaysia for 3%, Thailand for 11%.
"The increase of the index is dependening on intervention of Bank Indonesia (BI). The question is ‘will the central bank buy dollars to save the exchange rate or not’. "
Vice President Samuel Securities M Alfatih saw the index to fall deeper. "Technical rebound can be happened tomorrow, but if the increase cannot reach the level of 3,850, the index is likely to continue to fall," he said.
Conversely, if the index reaches the 3,850, he said, the market can be confident to actively trade. "As long as there is no good news from the European debt and economic conditions of China and India which continue to show a slowdown, the index will be difficult to rebound," he explained. (t03/msw)