Rupiah plunges to new low over unfounded rumors<\/p>\n
JAKARTA (JP): The rupiah plunged into uncharted territory
\nyesterday, touching a new historic low of 4,600 against the U.S.
\ndollar, over unfounded rumors on President Soeharto's health,
\ncurrency dealers said.<\/p>\n
But the stock market shrugged off the rumors and continued a
\nfour-day consecutive gain, with the Jakarta Stock Exchange
\ncomposite index rising a modest 0.4 percent, stockbrokers said.<\/p>\n
\"The market was swamped by rumors that President Soeharto was
\nseriously ill. People were jittery, pulling down the rupiah to an
\nunrealistic level. I just can't believe it,\" said a local private
\nbank chief dealer.<\/p>\n
\"I think it is the work of those who are in a long dollar
\nposition. By making this fuss, they could make a lot of gains,\"
\nadded a state bank chief dealer.<\/p>\n
Spot rupiah hit another historic low of 4,600 to the
\ngreenback, down 450 points from an opening of 4,150 to the
\ndollar. The rupiah closed at 4,550\/75.<\/p>\n
Yesterday's drop was the rupiah's largest single-day drop --
\noutstripping the previous intraday fall record of 155 points in
\nAugust when the central bank floated the currency.<\/p>\n
Local currency dealers said rumors about Soeharto's health
\nstarted in Singapore early in the morning and continued to Hong
\nKong, Japan and the local market, forcing local people to dump
\ntheir rupiah holdings to buy dollars.<\/p>\n
Minister\/State Secretary Moerdiono and Soeharto's second son
\nBambang Trihatmodjo separately denied the market rumors and said
\nthe President was in good health and resting at home.<\/p>\n
Currency dealers said the denials from Moerdiono and Bambang
\nrelieved the market a bit, but warned that sentiment remained
\nbearish.<\/p>\n
They also said the market still suffered a shortage of dollars
\nas those holding dollars preferred swapping them to selling them
\non the spot market.<\/p>\n
Consequently, short-end swap rates entered negative territory
\nand overnight dollar interest rates skyrocketed to between 12 and
\n18 percent from normal rates of 6 percent.<\/p>\n
The private bank chief dealer said foreign operators,
\nespecially those in Singapore, were continuously flooded with
\nrupiah as more and more wealthy Indonesians transferred their
\nsavings.<\/p>\n
\"Today, my bank lost one customer with a deposit of US$1
\nmillion. He said he would place his money in a Singapore bank. I
\ndon't know how to prevent such a kind of capital outflow in a
\nfree foreign exchange regime,\" he said.<\/p>\n
\"In this situation, foreign players will continue to dictate
\nlocal players. They are free to play with enough liquidity, while
\nlocal players are being strangled with continuing tight
\nliquidity,\" he added.<\/p>\n
Dealers said Bank Indonesia, the central bank, was not seen
\nintervening in the foreign exchange market. But some dealers said
\nthe central bank intervened directly by buying rupiah from banks,
\nnot through money brokers.<\/p>\n
They said Bank Indonesia also intervened in the money market
\nby borrowing rupiah through the interbank market, which sent
\nshort-term interbank rates going up to over 25 percent.<\/p>\n
A major fire at one of the central bank's buildings Monday
\naffected clearing activities -- canceling interbank transactions
\nthrough the interbank money market -- and made the rupiah even
\nmore expensive as all big transactions had to be settled with
\nbank drafts, the said.<\/p>\n
But Bank Indonesia said in a statement yesterday that all
\nclearing activities had returned to normal.<\/p>\n
The bruised rupiah, however, did not affect the stock market,
\nwhich had been guarded by state-owned securities houses,
\nstockbrokers said.<\/p>\n
The Jakarta Stock Exchange composite index closed up 1.883
\npoints at 425.496, with a total turnover of 465.5 million shares
\nworth Rp 541.944 billion ($118.5 million).<\/p>\n
\"I don't see any fundamental reason to support the market with
\na sagging rupiah and high interest rates. I think it was
\nDanareksa and Bahana which drove up the index,\" a local
\nsecurities analyst said.<\/p>\n
He said state-owned Danareksa Sekuritas and Bahana Securities
\nwere equipped with combined fresh funds of some Rp 1 trillion
\nfrom state-owned enterprises.<\/p>\n
In an effort to drive the rupiah, he said, Danareksa was seen
\nactively buying the largest-cap stock, state-owned domestic
\ntelecommunications firm Telkom, to drive up the index.<\/p>\n
Telkom accounts for 17.85 percent of total market
\ncapitalization.<\/p>\n
Telkom closed up Rp 150 at Rp 3,225, while international
\ntelecommunications operator Indosat slipped down Rp 75 to Rp
\n9,175.<\/p>\n
Cigarette maker Sampoerna fell Rp 150 to Rp 4,925, while
\ncompetitor Gudang Garam fell Rp 25 to Rp 8,650.<\/p>\n
Bank International Indonesia fell Rp 50 to close at Rp 475,
\nBank Negara Indonesia dropped Rp 50 to Rp 550 and Bank Dagang
\nNasional Indonesia closed Rp 25 lower at Rp 400. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-plunges-to-new-low-over-unfounded-rumors-1447893297",
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