Reforms fails to impress rupiah and stocks<\/p>\n
JAKARTA (JP): A new reform measure announced by the government
\nyesterday failed to impress financial markets yesterday, with
\nboth the rupiah and share prices losing ground in moderate
\ntrading.<\/p>\n
\"The price of the rupiah in the market has been discounted by
\nthe high expectation of the market on the visit of IMF officials
\nto Indonesia,\" a currency dealer said.<\/p>\n
The government announced transparent and concrete economic
\nmeasures yesterday ranging from a more realistic review of the
\n1998\/1999 state budget proposals to curtailing government
\nfinancial support for the national car project and scrapping some
\nagricultural monopolies.<\/p>\n
The rupiah failed to maintain extended three-day gains
\nfalling to as low as 8,450 to the U.S. dollar in the afternoon on
\na combination of high dollar demand by local corporations and
\nStandard & Poor's downgrade rating of Indonesian banks.<\/p>\n
The spot rupiah closed at 8,450\/8,700 after crossing the 8,000
\npsychological level against an opening of 7,200\/7,400 in the
\nmorning.<\/p>\n
\"But volume remains thin with very limited transactions,\" a
\ndealer said.<\/p>\n
The rupiah strengthened to as high as 6,950 against the dollar
\nshortly after President Soeharto announced the economic reforms,
\nbut then fell to 8,450 in the afternoon.<\/p>\n
\"It's just a pity that good news on economic reforms announced
\nby the government failed to put the rupiah on an upward trend,
\nbecause Standard & Poor's announced the downgrade rating of
\nIndonesian banks,\" another dealer said.<\/p>\n
As the rupiah fell, stock prices on the Jakarta Stock Exchange
\nalso descended after a three-day rally on profit taking, with the
\nmain price index falling 13.74 points to close at 387.243 from
\n403.98 the previous day.<\/p>\n
\"Stock prices will not continue to go up. After making a
\nthree-day rally, today (yesterday) was the time for investors to
\ntake profits,\" head of research at Trimegah Securities David
\nChang told The Jakarta Post.<\/p>\n
Stock brokers attributed the fall of stock prices to profit
\ntaking by most investors.<\/p>\n
\"The rise of stock prices in the last three days was supported
\nby an increase in blue chips and today's (yesterday's) fall was
\ndriven by the fall of most blue-chip stock prices,\" a broker with
\na local brokerage firm said.<\/p>\n
Other currencies<\/p>\n
Other Asian currencies also headed back downhill as optimism
\nover Indonesia's fresh commitment to IMF-sponsored economic
\nreforms quickly evaporated, leaving only demand for the U.S.
\ndollar, Reuters reported yesterday.<\/p>\n
President Soeharto said after a meeting with IMF chief Michel
\nCamdessus the government would cut subsidies on fuel imports, end
\ntax benefits under the national car program and dismantle
\nmonopolies in basic commodities except rice.<\/p>\n
Analysts hailed the measures as a step towards restoring
\nconfidence in Indonesia and in the region's financial markets.<\/p>\n
\"All the ingredients are there to turn the boat around. But it
\nneeds a follow-up, particularly on the debt strategy, which has
\nnot been addressed,\" said Christa Marti, economist at UBS
\nSecurities in Singapore.<\/p>\n
The Malaysian ringgit slid to 4.300\/400 per dollar from
\n4.2150\/250 five hours earlier and 4.2900\/3400 late on Wednesday.<\/p>\n
Dealers said trade was very thin and choppy, but the ringgit's
\nweakness was contained by buying of the ringgit\/Singapore dollar
\ncross.<\/p>\n
The Singapore dollar fell sharply to 1.7660\/90 to the U.S.
\ndollar from 1.7435\/85 five hours earlier and levels of 1.7475\/525
\nlate on Wednesday.<\/p>\n
\"There was buying of ringgit\/Sing because it's been down for
\nso long and some interbank players were trying to cover their
\nshort positions (in dollar\/Sing),\" a U.S. bank dealer said.<\/p>\n
The Thai baht softened to 52.90\/53.15 to the dollar onshore
\nagainst 52.70\/53.20 late on Wednesday. Offshore baht weakened to
\n51.60\/53.10 after breaking above the 50.00 level in early trade.<\/p>\n
The Philippine peso extended its recent rally to 41.50 per
\ndollar against Wednesday's 42.35 close as corporate demand for
\ndollars subsided and regional sentiment improved.<\/p>\n
The Philippine Monetary Board said it would allow exporters to
\nopen non-deliverable forward contracts as long as they sold a
\ncorresponding amount of dollars in the spot market.<\/p>\n
The South Korean won ended firmer at 1,605 per dollar from a
\nprevious 1,671 close on inflows of foreign portfolio funds as
\nefforts to resolve Korea's debt problem gathered pace.<\/p>\n
The Finance Ministry said Korea's usable foreign reserves
\nwould reach $24 billion at the end of March and $40.7 billion at
\nyear-end. Usable reserves stood at $8.87 billion at end-1997.<\/p>\n
The Taiwan dollar ended higher at T$33.980 to the U.S. dollar
\nagainst a previous T$34.094 close, helped by the stock market's
\nextended rebound and foreign funds' net buying.<\/p>\n
The Hong Kong dollar strengthened to 7.7405\/25 from an opening
\n7.7455\/75. Interest rates rose amid rumors that property company
\nSino Land had defaulted on its loans.<\/p>\n
A company executive denied the rumors overnight but they
\ndragged the blue chip Hang Seng Index down by seven percent.<\/p>\n
The Indian rupee remained weak at 40.28\/31 to the U.S. dollar
\ndespite the central bank's intervention. (aly)<\/p>",
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