Rupiah breaks 13,000 barrier against dollar<\/p>\n
JAKARTA (JP): The rupiah broke the 13,000 barrier against the
\nU.S. dollar in thin morning trade yesterday but managed to
\nrecover slightly in the afternoon to end the day at 12,900.<\/p>\n
Currency dealers attributed the rupiah's slump to political
\nuncertainty at home and weak regional markets.<\/p>\n
The sharp drop in the currency dragged down local stock prices
\nas investors became concerned that the rupiah's fall would
\nfurther dampen operations of publicly listed companies.<\/p>\n
The market sentiment, hit by political uncertainty over the
\nlast several weeks, was affected by fears over the Japanese yen's
\ndrop against the U.S. dollar and a possible devaluation of the
\nChinese yuan.<\/p>\n
\"This negative sentiment hit both the rupiah and the stock
\nmarket,\" one analyst said.<\/p>\n
Currency dealers said that the rupiah, which opened yesterday
\nat 11,800 against the greenback, might further sink to 15,000 in
\nthe days ahead should regional markets continue their downward
\ntrend on top of political uncertainty at home.<\/p>\n
The rupiah plunged to 14,500 against the dollar on Jan. 27
\nafter reaching a record low of 16,800 on Jan. 9.<\/p>\n
\"Should there be any major social and political unrest in the
\ndays ahead, the rupiah could touch uncharted territory,\" one
\ndealer said.<\/p>\n
The country's social and political uncertainties have remained
\nunresolved, with more protests seen in several major cities here
\ndemanding companies to raise wages and an end to rampant nepotism
\nand corruption.<\/p>\n
Following a public protest against Maspion Group in Surabaya,
\nEast Java, the previous day, more than 1,000 employees of the
\nstate-owned airline PT Garuda Indonesia, including pilots in
\ntheir airline uniforms, staged a protest demanding a total
\nmanagement overhaul and the eradication of corruption, nepotism
\nand collusion from the airline.<\/p>\n
An economist with Danareksa Sekuritas, Raden Pardede, said
\nyesterday that similar protests would further hamper the
\ncountry's efforts to improve its economic situation.<\/p>\n
\"If similar social unrest takes place, the country's political
\nsituation will worsen,\" he said, adding that efforts to bring the
\ncountry out of its dire crisis would not bear any fruit.<\/p>\n
He said the country's economy and financial markets would
\nlikely weaken in the medium and long terms if there were no
\nclear-cut measures introduced by the government to address
\npolitical problems.<\/p>\n
\"Political stability is the key factor in healing the
\ncountry's economy and financial markets. The longer the political
\nuncertainties remain unresolved, the longer it will take to
\nimprove our economy,\" another analyst said.<\/p>\n
Following the fall of the rupiah, stock prices on the Jakarta
\nStock Exchange (JSX) closed 0.7 percent lower or 2.92 points to
\n408.08 yesterday on a total turnover of 250.72 million shares on
\nthe regular market valued at Rp 235.59 billion (US$20.48
\nmillion).<\/p>\n
Stockbrokers said that trading in the local bourse remained
\nlethargic for the whole trading day with most investors seen
\nplacing large selling orders on most stocks.<\/p>\n
\"I think investors are fully aware that the country's economy
\nwill continue to deteriorate,\" a dealer with Bali Securities said
\nyesterday.<\/p>\n
He attributed the mild decline in the main price to arbitrage
\nbuying on cross-listed stocks like PT Telkom and Indosat to
\nbenefit from the weakening rupiah.<\/p>\n
The stock prices of the state telecommunications firm PT
\nTelkom and satellite operator Indosat account for about 30
\npercent of market capitalization in the local exchange. (aly)<\/p>",
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