Capital control issues boost rupiah, hit stocks<\/p>\n
JAKARTA (JP): The rupiah rallied on Monday to close at 10,575
\nagainst the U.S. dollar on news that the government was
\nconsidering tightening the monitoring of capital flows into and
\nout of the country, currency dealers said.<\/p>\n
The news also sent ripples through the local stock market,
\ncontributing to a 0.7 percent drop in share prices, stockbrokers
\nsaid.<\/p>\n
Currency dealers said that news regarding the possibility of
\nincreased monitoring of foreign exchange flows had encouraged
\nsome offshore players, especially those with short rupiah
\npositions, to unload their dollar holdings to cover their future
\nrupiah obligations.<\/p>\n
\"Although the government has repeatedly stated that it will
\nnever adopt capital controls like in Malaysia, offshore players
\nhave not yet ruled out the possibility and are scrambling for
\nrupiah,\" a dealer with a local private bank said.<\/p>\n
Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita told Bisnis Indonesia on Monday that the
\ngovernment was studying various ways to monitor foreign exchange
\nflows, including obliging firms to deposit export earnings in
\nlocal banks.<\/p>\n
However, Ginandjar made clear that any system would not
\ninclude capital controls like those recently introduced by
\nMalaysia.<\/p>\n
Currency dealers said the rupiah was also boosted by continued
\ndollar selling on the part of state banks. Moderate dollar
\nselling by state banks practically held the rupiah-dollar rate at
\nthe 10,575 level all day.<\/p>\n
\"The rupiah never fell back to over 10,600 against the dollar
\ntoday because state banks continued to sell dollars for 10,600 or
\nless,\" a dealer with another local private bank said.<\/p>\n
He also said that the rupiah was boosted by improved sentiment
\nacross the region.<\/p>\n
With such positive sentiment on the rupiah, currency traders
\nare practically ignoring the gloomy picture of the Indonesian
\neconomy, with gross domestic product contracting by 13.59 percent
\n(in the first nine months of this year) and the inflation rate
\nrising a further 3.75 percent in September.<\/p>\n
Stockbrokers and analysts said that news of capital controls
\nand worsening economic indicators had left bleak sentiment on the
\nbruised local market.<\/p>\n
Bahana Securities associate director and head of equity sales
\nAndre Cita said that the capital control issue would linger on
\nuntil the government, with the consent of the International
\nMonetary Fund (IMF), made whatever move it intends to take with
\nregards to monitoring capital flows into and out of the country.<\/p>\n
Cita said he believed that whatever measures the government
\ndid eventually take, they would not include the type of controls
\nrecently introduced by Malaysia.<\/p>\n
Cita said that it was the fiasco surrounding emerging markets
\nand not domestic issues which had driven the market down on
\nMonday.<\/p>\n
\"The main issue here is not domestic factors, but global
\nfactors. Fund managers are shunning emerging markets now. They
\nare selling whatever stocks they hold in emerging markets without
\nconsidering their value,\" he said.<\/p>\n
The Jakarta Stock Exchange (JSX) Composite Index closed down
\n1.915 points at 261.314, with a trading turnover of 108.1 million
\nshares valued at Rp 110.53 billion.<\/p>\n
State-owned telephone monopoly PT Telkom, which accounts for
\n17 percent of market capitalization in the JSX, failed to drive
\nup the index, despite recording a rise in value. Shares in Telkom
\nrose Rp 75 to close at Rp 1,400 on 14.7 million shares traded.<\/p>\n
Shares in state-owned satellite operator PT Indosat dropped Rp
\n425 to Rp 5,125 on 449,000 shares. The state-run general mining
\nfirm PT Aneka Tambang also fell Rp 75 to Rp 1,125 on 3.3 million
\nshares, state-owned tin miner PT Tambang Timah lost Rp 150 to Rp
\n3,900 on 730,000 shares, while shares in state-owned cement
\nmanufacturing firm PT Semen Gresik rose Rp 400 to Rp 6,000 on 1.8
\nmillion shares.<\/p>\n
Cigarette manufacturer PT HM Sampoerna's shares slid Rp 75 to
\nRp 2,300 on 2.58 million shares traded, while shares in the rival
\nPT Gudang Garam fell Rp 225 to Rp 5,100 on 3.1 million shares.
\n(rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/capital-control-issues-boost-rupiah-hit-stocks-1447893297",
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