FOREX DAILY REPORT

Mar 17, 2010

USD/JPY

Yen was down against the dollar toward London open after BOJ acted doubling the scale of a three-month fund supply to banks to Y20 trio, in regards to ease its monetary policy to beat deflation. It fell to 90.69 level, reversed its gain earlier from 90.02 hit before BOJ announcement. Some yen option-related selling also seen from hedge fund since 90 low level. Yen also down against the euro, hit 125.00 from 124.07 earlier, dragged by lower yen against the dollar. News of S&P removed its credit negative watch to Greece also seen to put Yen even under pressure against the euro.

Forecast:

Yen might be kept under pressure in overnight trade, but range will be limited with repatriation flows remain intact capping the currency's loss against the major currencies. US data released later on the day is Producer Price, but with unchanged outlook from Fed on its monetary policy, we suspect effect from this data will be marginal. Expected range: 90.30-91.30

USD/IDR

The pair was opened at 9155, in line with dollar weak elsewhere IDR is also benefitted from the sentiment, it got stronger since early trade triggered by aggressive offshore players' selling. Most inflows still went to local stocks (JKSE +3.25%), bonds and also SBI market. While BI decision to shift from short term SBI to longer ones doesn't seem to ease demand for SBI. BI data showed, offshore holdings on SBI hit IDR 66.03 trio, which was the highest since January 2010. IDR hit the high of 9100 in midday trading before coming back to 9117 toward market closing. It seemed state banks defended IDR's gain in order to prevent the currency moved rapidly; some corporate demands also seen limited IDR's gain around 9100 low level.

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USD/JPY

The dollar fell to its lowest in more than two months against the yen, as the dollar slid broadly.

However, in Asia markets, the dollar was flat against the yen,

The yen has been strengthening across the board in the past weeks, hitting a year high against the

euro, as the yen benefits from general risk aversion.

The potential for fund repatriation by Japanese corporates and investors before their end-March book

closing may also boost the yen and the drive the dollar lower against the Japanese currency in the near

term.

Furthermore, before the Friday's payroll, investors also await US ADP employment report due

tonight, which is forecast 20,000 jobs were lost in February vs a loss of 22,000 January.

Forecast: Markets are awaiting announcement from Greece later. It seems positive but the support for euro could be limited as Greece still faced some debt issues. Expected range: 88.20-89.20

USD/IDR

The dollar was opened lower at 9270 from yesterday's close 9300, in line with the weakening of the dollar against major currencies. Yet, there was no follow trough selling, and it rose back to 9295. Some were focusing on the bailout inquiry, but it should remain tentative until the bailout inquiry is resolved. Moreover, the central bank is expected to keep rates unchanged at 6.50% tomorrow, as the price pressures are likely to remain manageable due to a strong rupiah which helps to reduce imported inflation. Therefore, there will be no market impact seen if the rates are kept on hold.

Closing market on Mar 3, 2010 Jakarta market at 04:30 pm. on Mar 3, 2010

Nikkei : 10253.14 (+31.30) USD/JPY : 88.65/88.75

JGB : 1.330 (0.00) EUR/ USD : 1.3645/1.3655

JSI : 2567.089(-9.502) USD/IDR : 9277

Closing market on Mar 2, 2010 EUR/JPY : 121.10/121.30

DJI : 10405.98 (+2.19) BTMU JIBOR 1 mo. : 7.25%

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Major

The GBP remained in focus following a sharp drop against the U.S. dollar yesterday on concerns about the country's weak fiscal position and uncertainty over a looming election. Expectations that a large amount of sterling may be sold to fund the US$35.5 billion purchase of an America's big insurance company's Asian life-insurance business by a U.K. insurer big name also weighed on the pound. The pound was recently trading at $1.4870, down from $1.4993 in New York late yesterday. However, it held above Monday's low of $1.4785—the currency's weakest level since May 1, 2009. The Australian dollar got an early lift against its U.S. counterpart in Asian trading Tuesday after the Australian central bank raised interest rates as expected by a quarter point to 4.0%, but the move only briefly stalled the greenback's overall rise. The dollar index (.DXY), which measures the greenback against a trade-weighted basket of six major currencies, rose to 81.011, from 80.753 in late North American trading yesterday. The dollar edged up to 89.23 yen, from 89.06 yen late last night.

Forecast:

Market has their eyes still on fiscal deficit issues that overwhelm the European countries, including the U.K.; pessimistic sentiment towards the current and outlook of global economy drives up risk aversion and push JPY higher as safe haven.

Forecast USD/JPY range: 88.50 – 89.50

USD/IDR

The Indonesian rupiah traded near the strongest level in more than five weeks on optimism an export recovery is gathering pace. Foreign investors bought $20 million more local shares than they sold yesterday, helping lift the Jakarta Composite Index higher for a second day. Exports, which account for about 29% of Indonesia's GDP, rose in January by the most since at least December 1995. Policy makers will likely keep the benchmark interest rate at 6.5% on March 4. The rupiah strengthened to 9270 even in the midst of the plenary session of voting for Century Bank's bail-out decision. The pair eventually closed at 9305.

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