Mandiri Sekuritas Weekly Economic Research (31-Aug-2010) - Economy: Rupiah weakens on concerns over global economic recovery; Inflation may accelerate

Market review
§ Concern over faltering global economy recovery continues to weaken rupiah.
§ JCI contracted last week.

Global economy
§ Recent releases of weak economic indicators have prompted the US and Japan governments to extend stimulus. We expect rupiah appreciation to continue toward YE2010.

Domestic economy
§ Inflation may accelerate to 6.8% yoy in Aug10, mainly on the back of seasonal factors and higher administered prices.
§ Foreign exchange reserves reached the highest level of US$80.9bn in Aug10. BI expects the reserves to reach US$85bn to US$90bn by YE10.