Issuers enjoy a stronger rupiah

JAKARTA. During the last week, rupiah exchange rate against US dollar stood at below IDR13,000 per US$1. This has brought positive impact to some issuers, which are vulnerable to be affected by the exchange rate fluctuation.

The stable rupiah exchange rate will benefit pharmacy industry. Director and Corporate Secretary of PT Kalbe Farma Tbk (KLBF) Vidjongtius said that a stronger rupiah will bring positive sentiment to pharmacy issuers, on the grounds that a stronger rupiah will reduce costs.

Research Associate at Daewoo Securities Indonesia Giovanni Dustin said that the rupiah continues to strong thanks to repatriated funds.

Giovanni said that during November 2008 to June 2011 rupiah appreciated by 32.7% from IDR12,650 to IDR8,513. During the period, various industry was the sector that improved the most thanks to a stronger rupiah.

Within the three years, the sector grew by 493.2%, or higher than 234.5% of Jakarta Composite Index or JCI growth. Consumer sector recorded a 262.2% of growth, or also higher than JCI growth during the same period. Meanwhile, infrastructure recorded the lowest growth among other sectors with only 88.3% of growth.

Giovanni said that tax amnesty will affect to rupiah in a long term. In other words, rupiah wull not have significant growth during in a short time. He predicted that rupiah will stand at the level of IDR13,200 per US$1 by this year. “A stronger rupiah will not bring significant effect to issuer’s performance, while BI is likely to maintain rupiah at the level of IDR13,000 per US$1”, Giovanni added.

During this year, the lowest and highest levels of rupiah exchange rate against US dollar were at IDR13,317 per US$1 and IDR12,955 per US$1, respectively.

Analyst at Asjaya Indosurya William Surya Wijaya said that a stronger rupiah is unlikely to bring positive sentiment to PT United Tractors Tbk (UNTR), because the issuer uses US dollar for transaction.

William added that a stronger rupiah will decrease the performance of issuers, which depend on export. “For the examples, AALI and SRIL. Mining sector may have slow performance, but its performance will be supported by the increase in commodities price”, he said.

(Muhammad Farid/Translator)