Rupiah shoots up to 10,000 against greenback, shares dip<\/p>\n
JAKARTA (JP): The rupiah continued to rally for the second
\nconsecutive day on Tuesday, rising 5.4 percent to close at 10,000
\nagainst the U.S. dollar, currency dealers said.<\/p>\n
They said market talk on the possibility of more diligent
\nmonitoring of capital flows and persistent dollar selling by
\nseveral state banks contributed to the rupiah's strong standing.<\/p>\n
But talk of monitoring capital flows caused share prices on
\nthe bruised local market to slide further, with the benchmark
\nprice gauge falling 1.2 percent, stockbrokers said.<\/p>\n
Currency dealers said that most offshore operators, especially
\nthose from Singapore, were unnerved by talk of capital controls
\nafter the rupiah breached the 10,500 level during the morning
\ntrading session.<\/p>\n
\"Singapore operators sell their dollars whenever the rupiah
\nbreaches the 10,500 level,\" Freddy Khou, country treasurer of
\nCitiBank Indonesia, said.<\/p>\n
Tuesday's closing price of 10,000\/10,100 against the dollar
\nwas 5.4 percent higher than Monday's close of 10,575.<\/p>\n
Talk of capital controls emerged in Jakarta again on Monday
\nafter Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita said the government was studying ways of
\nmonitoring foreign exchange flows into and out of the country.
\nThe measures under consideration include requiring firms to
\ndeposit export earnings in domestic banks.<\/p>\n
Sentiment on the rupiah was also boosted by improving
\nsentiment on regional currencies, most of which recorded big
\ngains on Tuesday, dealers said.<\/p>\n
They said the rupiah was also buoyed by moderate but
\npersistent dollar-selling by several state banks.<\/p>\n
\"Although the amount was limited, dollar selling by state
\nbanks succeeded in improving sentiment on the rupiah on Tuesday,\"
\nanother dealer with a local private bank said.<\/p>\n
The dealer predicted that unfaltering bullish sentiment on the
\nrupiah would soon bring the currency back above the 10,000 level.<\/p>\n
However, lingering fears over the possibility of political
\nunrest ahead of the Indonesian Democratic Party (PDI) congress in
\nBali from Oct. 8 to Oct. 10 could curtail the rupiah's upward
\ntrend, he added.<\/p>\n
\"But if there are no reports of clashes, the rupiah should go
\non toward 9,500 (against the dollar),\" the dealer said.<\/p>\n
Despite the strengthening rupiah, stock prices on the Jakarta
\nStock Exchange (JSX) closed 1.2 percent lower, with the JSX
\nComposite Index falling 3.20 points to 258.10.<\/p>\n
Trading turnover was valued at Rp 145.56 billion (US$14.5
\nmillion), with 282.34 million shares changing hands.<\/p>\n
The institutional sales director with Mashill Jaya Securities,
\nAntonio Yongnata, said foreign selling pressures on certain blue
\nchip stocks had been responsible for the falling index.<\/p>\n
Talk of capital controls and the bleak outlook for most listed
\nfirms have triggered a selling spree among foreign investors, he
\nadded.<\/p>\n
\"Share prices for some big cap stocks are undervalued but
\ninvestors never know whether prices reflect the companies real
\nfundamentals,\" he said.<\/p>\n
The head of research at Sigma Batara, Fadjar Limin Sutandi,
\nadded that foreign investors would continue to shun Indonesia
\nwhile its medium and long-term economic outlook remained gloomy.<\/p>\n
Besides, he added, they have been discouraged by the
\ngovernment's slow response to the country's dire economic
\nconditions. (aly)<\/p>",
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