Rupiah climbs on market optimism as stocks gain<\/p>\n
JAKARTA (JP): The rupiah strengthened for the third
\nconsecutive day yesterday on optimism that proposed financial aid
\nfrom the International Monetary Fund (IMF) would help mend the
\ncountry's monetary problem.<\/p>\n
Currency dealers said that the rupiah rose sharply in late
\ntrading yesterday breaking the psychological level of 3,400 to
\nclose at 3,355\/65 against the opening of 3,470\/90 in the morning.<\/p>\n
Currency dealers attributed the improvement of the rupiah to
\nIMF's positive response to the Indonesian proposal and to dollars
\nbeing sold by overseas fund managers, including the Quantum Fund
\ncontrolled by George Soros, as well as profit taking by some
\ndomestic operators.<\/p>\n
"The market has seen a sale of dollars by overseas operators,
\nincluding financier George Soros," a local bank dealer said
\nyesterday.<\/p>\n
Foreign exchange dealers said a meeting between Minister of
\nFinance Mar'ie Muhammad and Bank Indonesia governor J. Soedradjad
\nDjiwandono with foreign fund managers helped build the market
\nsentiment.<\/p>\n
Mar'ie and Soedradjad briefed fund managers yesterday about
\nthe government's priority program in fixing the monetary problem.<\/p>\n
"Though no clear financial package has been announced yet, the
\nmeeting has helped restore investor confidence in the
\nmeantime ... allowing the rupiah to gain ground," one local
\ndealer said.<\/p>\n
President director of Bank Internasional Indonesia (BII) Indra
\nWidjaja said yesterday that the Indonesian government had made a
\nvery wise and prudent move to seek help from the IMF.<\/p>\n
"Why should we be ashamed of seeking help if such help
\nrestores the country's economy?" he asked.<\/p>\n
Currency dealers said the rupiah had strengthened to 3,310
\nagainst the greenback in midday trading but slid in the afternoon
\non a fresh demand for the dollar.<\/p>\n
"The market expects the rupiah to strengthen to between 2,950
\nand 3,100 in early trade next week," a local bank chief said
\nyesterday.<\/p>\n
Indonesia's rupiah has lost over 35 percent of its value
\nagainst the U.S. dollar since early July.<\/p>\n
Currency dealers said Bank Indonesia did not intervene in the
\nmarket yesterday like it did the previous three days.<\/p>\n
"It's a psychological game now. Maybe the news about seeking
\nhelp from the IMF has already been strong enough to mend public
\nconfidence, which has faded over the past few weeks," a dealer
\nsaid.<\/p>\n
Stock prices on the Jakarta Stock Exchange also bore fruit of
\nthe strengthening rupiah with the main price gauge rising 2.6
\npercent or 13.64 points to close at 534.75 points yesterday.<\/p>\n
Total turnover was 555.4 million shares in the regular market
\nvalued at Rp 608.6 billion (US$181.1 million)<\/p>\n
Other Southeast Asian currencies also consolidated further
\nagainst the U.S. dollar, enjoying a reprieve after a turbulent
\nfew months since a currency turmoil erupted in the region.<\/p>\n
The rebound boosted regional stocks but analysts said currency
\nvolatility could return if two awaited events -- the unveiling of
\nthe Malaysian budget and Thailand's financial rescue plan --
\ndisappointed the fickle markets.<\/p>\n
The Malaysian ringgit closed at 3.0670, up from 3.0825, while
\nthe Singapore dollar strengthened to 1.5330 from 1.5380 the day
\nbefore, AFP reported.<\/p>\n
The Thai baht firmed to 35.60 from 35.70 and the Philippine
\npeso closed at 33.52, up from 34.12, after spiking to 32.93,
\nforcing a break in trading under new rules that imposed a
\ncooling-off period if the currency moved 3.5 percent either way.<\/p>\n
The regional currency crisis began on July 2 when the baht's
\nde facto devaluation devastated confidence in the entire region.
\nSince then regional currencies have hit record lows, with the
\nrupiah losing more than half of its value at one point. After
\ngains this week, the rupiah was 38 percent lower than its level
\non July 1. (aly)<\/p>\n
Table: Southeast Asian Currencies<\/p>\n
July 1 Oct. 10 Pct. Fall
\n Baht 24.70 35.60 -44%
\n Rupiah 2,433 3,360 -38%
\n Peso 26.37 33.52 -27%
\n Ringgit 2.5245 3.0670 -21.5%
\n Sing. dollar 1.4300 1.5330 -7.2%<\/p>",
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