Stimulus package expected to boost rupiah

JAKARTA. An economic policy package set to be announced on Wednesday will hopefully boost Indonesia’s economic growth and ease pressure on the rupiah exchange rate, says one analyst.

“The rupiah exchange rate has begun to recede in response to the government’s expected announcement of an economic policy package later today. It is hoped sentiments from the government can maintain the people’s purchasing power, draw capital flows, lift some regulations that have dampened the investment climate and eventually strengthen Indonesia’s economy,” said Samuel Sekuritas economist Rangga Cipta in Jakarta as quoted by Antara.

On Wednesday morning, the rupiah exchange rate had strengthened by 21 points to Rp 14,255 from Rp 14,276.

Rangga said pressures on Asian financial markets caused by the US dollar had also begun to calm down, following optimism about global growth due to improved Europe and China economic data.

“Improved Euro economic data along with China’s export growth have brought high hopes that the global economy will grow, including in Indonesia,” he said.

PT Platon Niaga Berjangka analyst Lukman Leong said China’s reported plan to ease its monetary policy had added to hope that the global economy would maintain its growth.

“Sentiments from China have slightly increased investors’ interest in risky assets. Investors are optimistic that global economic growth will increase,” said Lukman.

On the other side, he added, some market players were still doubtful that that the US Federal Reserve would increase its fund rate in September, as the US economic data still showed fluctuations.