The Jakarta Post
The decisions reached during the Bank Indonesia board of governors meeting and by the Federal Open Market Committee (FOMC) this week will be important factors for the performance of the Jakarta Composite Index (JCI), analysts believe.
Securities firm analyst M. Nafan Aji said the JCI would hover between 5,915 and 5, 996 on Monday after it closed at 5,957 on Friday, 0.45 percent stronger than in previous days.
He predicted the US Federal Reserve would increase its reference rate by 25 basis points (bps) to 2.25 percent, which would encourage the inflow of capital to the US market.
“Meanwhile, domestically, a decision on the BI seven-day reserve repo rate [7DRRR] is expected to provide a positive catalyst to stabilizing the rupiah and will also be a positive catalyst for the index [JCI],” said Nafan as reported by kontan.co.id.
He said as long as the rupiah remained below Rp 15,000 per US dollar, BI would not need to increase its 7DRRR, which is currently at 5.5 percent.
Meanwhile, security firm Panin Securitas analyst William Hartanto said the FOMC and BI meetings would determine the movement of the JCI.
The FOMC meeting will be held from Sept. 25 to 26, and is expected to result in an increase to its key rate, while BI’s board of directors meeting will be held from Sept. 26 to 27.
Aji Setiawan of security firm Reliance Securitas also believed the Fed would increase its key rate by 25 bps on Sept. 26.
He suggested that investors should adopt a wait-and-see stance ahead of the FOMC and BI’s decision. (bbn)