Rupiah recovers after touching 12,000<\/p>\n
JAKARTA (JP): The rupiah recovered slightly yesterday
\nafternoon after touching a day low of 12,000 to the U.S. dollar
\non concerns over the future of Indonesia's reform program.<\/p>\n
The currency closed at 10,400 against the greenback, gaining
\nfrom Thursday's close of 10,500.<\/p>\n
Dealers said rumors that Indonesia would abandon International
\nMonetary Fund (IMF)-sponsored reforms and go ahead with its plan
\nto peg the rupiah to a foreign currency at a fixed exchange rate
\ncaused jittery dollar buying.<\/p>\n
The dealers said investors feared that the Indonesian economy
\nwould further sink if the government decided to abandon the
\nreform program.<\/p>\n
\"Frankly, they're just groundless rumors as there is no
\npositive sign to support such an idea,\" a chief treasurer of a
\njoint-venture bank said, pointing to mounting opposition from
\ninternational bodies for Indonesia to adopt the system.<\/p>\n
\"Market rumors like this have dictated the direction of the
\nrupiah against the American dollar and this will prompt the
\nrupiah to decline further below the 12,000 level next week,\" a
\nchief dealer said.<\/p>\n
Most international bodies and the Group of Seven (G-7)
\nindustrialized nations have opposed Indonesia's controversial
\nplan to implement the currency board system saying Jakarta is not
\nin a position to adopt the system and urging the country to stick
\nto the IMF reform program.<\/p>\n
The dealers also said overseas operators were making excuses
\nfor profit takings on early gains made in previous days.<\/p>\n
They said news on massive foreign exchange losses suffered by
\nstate-owned Bank Ekspor Indonesia (Bank Exim) also played a role
\nin the worsening market sentiment.<\/p>\n
\"People were surprised by the news of forex losses incurred by
\nBank Exim,\" another chief dealer with a joint-venture bank said.<\/p>\n
Some currency dealers have long known that the bank was
\nexperiencing financial difficulties, but the amount of losses was
\nmuch higher than expected, he said.<\/p>\n
\"But one thing's for sure, Bank Exim's forex losses will
\nfurther deteriorate foreign investor confidence in the country's
\nbanking system,\" he said.<\/p>\n
The dealer said Exim's foreign exchange loss was partially
\nattributed to the central bank's intervention late last year to
\nshore up the rupiah against the American dollar.<\/p>\n
\"I think Bank Exim has become a scapegoat for the central
\nbanks' repeated intervention in the currency market to prop up
\nthe rupiah,\" he said.<\/p>\n
Most dealers also attributed the weakening of the rupiah
\nduring the morning session to persistent dollar demand by local
\nbanks and corporations to pay their dollar-denominated
\nobligations.<\/p>\n
\"Pairing Bank Exim's forex loss, demand by local banks to
\ncover their dollar obligations remained high in the morning
\nsession,\" he said.<\/p>\n
As the rupiah recovered slightly, stock prices on the Jakarta
\nStock Exchange (JSX) slipped 0.8 percent yesterday as the
\nrupiah's recovery pushed down selective dollar-sensitive stocks
\noff their highs, stockbrokers said.<\/p>\n
They said foreign investors were in a profit-taking mood
\nthroughout the day, particularly on certain stocks that made a
\ngood run earlier this week.<\/p>\n
\"I think it's understandable for foreign investors to sell
\ntheir stocks for profit taking as the market continues to be
\nuncertain,\" a broker with Trimegah Securities said.<\/p>\n
The JSX Composite Index closed 4.25 points lower to 512. 23
\nfrom 516.48 the previous day.<\/p>\n
About 421.82 million shares changed hands on the regular
\nmarket valued at Rp 676.95 billion (US$65.09 million) yesterday.<\/p>\n
Chandra Nasution, an analyst from Pentasena Securities, said
\ntrading activities in the local exchange had lost direction over
\nthe past few weeks as the government had yet to announce any
\nclear-cut measures to restore market confidence. (aly)<\/p>",
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