The rupiah exchange rate in Jakarta interbank transactions moved higher on Wednesday morning by two points to Rp9.040, compared to where it previously closed at Rp9.042 per U.S. dollar.
"Domestic financial markets are technically stronger after experiencing a negative response to the cuts in the rankings of six EU countries by Moody`s," said Samuel Securities analyst Lana Soelistianingsih here on Wednesday.
Lana said that the cuts were due to the uncertainty of fiscal reforms and the economic framework, while the available resources to address the crisis remain limited.
She further said that the EU faces a weak macroeconomic outlook.
Moody`s officials also recalled that the macroeconomic weakness will continue to create uncertainty for investors, so the market will remain vulnerable and there is potential to further suppress government securities and banking.
"The cuts are still making the euro weak against the US dollar, while Asian markets are already factoring the cuts in previous trade.
This day would likely see a rebound," Lana said.
Monex Investindo Futures analyst John Ginting also said that the market is now beginning to focus on the finance ministers' meeting on Wednesday, though there are still significant risks for Europe.
"EU finance ministers will ask Greece to explain in advance about the 325 billion Euro austerity measures called for in the budget this year before they approve the `bailout` in today`s meeting," he said.
At the same time, he added, Greek political leaders are also required to make a written commitment to implement the agreements reached.
(SYS/A050/O001)
Editor: Suryanto
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