Concern over Brazil drags market down<\/p>\n
JAKARTA (JP): The country's plagued financial market dropped
\nagain for the second consecutive day on Thursday with the rupiah
\nlosing 1 percent and shares prices falling 2.5 percent.<\/p>\n
Currency dealers said the rupiah succumbed to hit an intraday
\nlow of 8,800 against the U.S. dollar as it took another blow from
\nthe domino effect of the Brazilian real's devaluation.<\/p>\n
The rupiah, nevertheless, managed to claw back to 8,675 at the
\nend of the day's trading. It was 1 percent down from Wednesday's
\nclose of 8,600.<\/p>\n
Dealers said the rupiah was dragged down in an unexpected
\nattack by offshore speculators and by fears that Brazil's
\neffective devaluation of the real could hit emerging markets,
\nincluding Indonesia's.<\/p>\n
\"The main cause for the rupiah's weak standing was probably
\nBrazil,\" said a chief dealer with a joint venture bank in
\nJakarta.<\/p>\n
Brazil's central bank chief, Gustavo Franco, resigned
\nWednesday and his successor, Francisco Lopes, announced a
\nwidening of the trading band for the country's currency, the
\nreal, which set off alarms about a global financial crisis.<\/p>\n
\"But on top of that the holiday mood ahead of the Muslim Idul
\nFitri festival and the country's increasing social and political
\nrisks put more pressure on the rupiah,\" a financial analyst with
\na local medium-size bank said.<\/p>\n
He predicted that the local unit would continue to be under
\nsiege due to the increasing country risk.<\/p>\n
Although it was under pressure, dealers said, Bank Indonesia
\nwas not seen in the market to prevent the rupiah from declining
\nfurther despite its governor's warnings the previous day.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin pledged on Wednesday
\nthat the government would step into the market to help the
\ncurrency recapture the 8,000 level by converting its dollar
\nholdings into rupiah.<\/p>\n
\"Unlike on the previous days, state banks which most of the
\ntime acted on behalf of the central bank or the government in the
\nmarket were not seen selling dollars today,\" another dealer said.<\/p>\n
Following the downward trend of the rupiah, stock prices on
\nthe Jakarta Stock Exchange (JSX) fell 2.5 percent with the
\nbenchmark JSX Composite Index closing 10.55 points lower at
\n408.55, off its intraday low at 399.86.<\/p>\n
Trading turnover totaled 294.02 million shares valued at Rp
\n289.49 billion.<\/p>\n
Decliners outnumbered advancers by 62 to 18 with 85 stocks
\nremaining unchanged.<\/p>\n
Among the companies hardest hit by the weak rupiah was
\nautomotive giant PT Astra International, which lost Rp 125 to
\nclose at Rp 850 on 13.5 million shares traded.<\/p>\n
Market leader, state-owned telecommunications firm PT Telkom,
\nwhich holds 17 percent of market capitalization, gained Rp 50 to
\nclose at Rp 3,375 on 10.8 million shares. This prevented the
\nindex from falling further.<\/p>\n
Stockbrokers attributed the persistent fall of local stock
\nprices to the general fall in the regional equity markets due to
\nthe Brazilian fiasco and massive selling pressure by most foreign
\nfund managers ahead of the Idul Fitri holiday next week.<\/p>\n
\"Heavy selling pressures on most blue chip stocks ahead of the
\nholiday have given no room for stock prices to rise,\" Suhendra,
\nan institutional sales broker with Trimegah Securindolestari
\nsaid.<\/p>\n
Most foreign brokerage firms such as Credit Lyonnais, Indosuez
\nWICarr, SG Securities and local giants Danareksa Sekuritas and
\nBahana Securities were on the selling side on Thursday.<\/p>\n
\"People tend to pull out of the market ahead of the holiday,\"
\nhe said.<\/p>\n
Head of research of BNI Securities Adrian Rusmana said fears
\nthat the country's social and political situation would
\ndeteriorate after the holiday are scaring investors away.<\/p>\n
\"The country's unresolved political and social crises remain
\nthe biggest problem for foreign investors,\" he said. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/concern-over-brazil-drags-market-down-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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