The rupiah is expected to strengthen further on the back of a better-than-expected recovery in the global economy, a Bank Indonesia (BI) deputy governor said on Friday, Reuters reported.

“The main reason is the global condition, in which I see signs of showing an early recovery. The developments in the first quarter are better than had been previously expected,” Hartadi Sarwono told reporters.

Sarwono also said an inflation rate of 5% this year was achievable. From January to April inflation has reached a mere 0.05%.

The rupiah has strengthened about 7% so far this year against the dollar to make it the strongest performer in the region.

 

The news was less positive on the investment front. India’s largest stainless steel producer JSL Ltd., formerly Jindal Stainless, said it had shelved a plan for a $1.2-billion joint venture with PT Aneka Tambang (Antam) in Indonesia, according to India’s Economic Times on Friday.

Another Indian-linked company, British-based Arcelor Steel, has also canceled plans for a major project in the country.

JSL’s director for strategy and business development, Arvind Parakh, said the project has been shelved since it is no longer commercially viable.

JSL Ltd last year entered into a joint venture with the state mining firm Antam to build a 20,000-ton ferronickel plant and 300,000-ton stainless steel slab unit in Indonesia. However prices of nickel, a vital input for producing the alloy, have dipped sharply.

"Nickel prices were hovering at $20,000-22,000 tons last year when we entered into the 55:45 JV with Antam, but now the prices have plummeted to $10,000 tons, making the project unviable," Parakh said.

However, JSL would continue to source nickel from Antam, which is currently scouting for possible buyers of JSL's stake in the joint venture, he said.

JPMorgan Chase & Co. on Monday upgraded Indonesian stocks on a recovering in the global economy and higher investor risk appetite for emerging market equities, Bloomberg reported.

Indonesia’s Jakarta Composite Index has climbed 28% and the market was upgraded from “neutral” because of the improving commodities and currency outlook, JPMorgan wrote.

On the stock market, the Jakarta Composite Index closed after a week cut short by a holiday at 1,881.71, compared to 1,750.91 a week earlier. The rupiah ended on Friday at 10,285 compared to 10,460 a week earlier.

Indonesia Growth Rate of Quarterly Gross Domestic Product by Type of Expenditure (%)

	2008				2009
	Q1	Q2	Q3	Q4	Q1
Household Consumption	5.67	5.52	5.33	4.84	5.84
Government Consumption	3.62	5.26	14.06	16.35	19.35
Investment	13.73	12.01	12.15	9.14	3.51
Export	13.64	12.36	10.63	1.82	-19.13
Import	17.99	16.11	10.97	-3.53	-24.09
Growth	6.25	6.42	6.4	5.18	4.37

 

 

 

 

 

 

 

 

 

 

 

 

Source: Statistics Center Board