Rupiah shoots up to 8,800 against dollar, stocks jump 8.4%<\/p>\n
JAKARTA (JP): The local financial market recorded significant
\nadvances on Thursday, with the rupiah breaking the 9,000 level to
\nhit an intraday high of 8,800 against the U.S. dollar and share
\nprices jumping 8.4 percent, dealers said.<\/p>\n
They said a bullish trend in the regional currency market
\ncoupled with persistent talk of a possible introduction of
\ncapital controls and dollar-selling by state banks were the
\ndriving forces behind the rupiah's strong gains.<\/p>\n
A chief dealer with a local private bank said: "I think
\ninvestors, especially from Singapore, are afraid of maintaining
\ntheir long-dollar positions for any longer because they sense the
\nstrong likelihood of an imposition of capital controls in the
\ncountry."<\/p>\n
The rupiah opened at 10,500 to the dollar but quickly shot up
\nto break the 9,000 level for an intraday high of 8,800 before
\nmorning trading ended. It, however, fell slightly in the
\nafternoon to close at 9,100.<\/p>\n
The rupiah closed on Wednesday at 9,500 and had been trading
\nnear the 11,000 level last week.<\/p>\n
Given the rupiah's strong showing over the past few days,
\noffshore operators -- the main players in the rupiah-dollar
\nmarket -- have been wary of building any new positions on the
\ndollar, dealers said.<\/p>\n
The lingering fears of a possible imposition of capital
\ncontrols remained the dominant factor behind the rupiah's strong
\ngains on Thursday despite government denials of such a move.<\/p>\n
Coordinating Minister for Economy Finance and Industry
\nGinandjar Kartasasmita said on Thursday the government was
\nstudying all options to improve foreign exchange flow management
\nbut had ruled out the possibility of capital controls.<\/p>\n
Besides the issue of capital controls, dealers also attributed
\nthe bullish sentiment on the rupiah to the peaceful opening of
\nMegawati Soekarnoputri's congress for her faction of the
\nIndonesian Democratic Party in Bali, the country's main tourist
\ndestination.<\/p>\n
The rupiah's rally would, however, be curtailed by the
\ndecreasing benchmark interest rates of Bank Indonesia's short-
\nterm promissory notes (SBIs), the dealers said.<\/p>\n
The auction of one-month SBIs on Wednesday produced a yield of
\n60.03 percent per annum, compared to 64.74 percent last week and
\nover 70 percent early last month.<\/p>\n
The falling rates, however, would continue to boost equity
\ninvestments in the shattered local stock market, stockbrokers
\nsaid.<\/p>\n
Share prices in the Jakarta Stock Exchange rose 8.4 percent,
\nor 22.38 points, to close at 288.55.<\/p>\n
Trading volume totaled 358.15 million shares changing hands
\nvalued at Rp 408.22 billion.<\/p>\n
Gainers led losers 99 to 14 with 64 stocks remaining
\nunchanged.<\/p>\n
Stockbrokers said the sharp rise was fueled by relatively
\nheavy foreign buying of certain selective stocks.<\/p>\n
The strengthening rupiah and falling interest rates were the
\nmain reasons driving foreign investors to reenter the market,
\nthey said.<\/p>\n
Bahana Securities associate director Andre Cita said the
\nmarket perceived some early signs of recovery in the country's
\neconomy, prompting investors to enter the market.<\/p>\n
"People have been waiting for good news so far ... and when
\nthey see some, they just jump into the market immediately," he
\nsaid.<\/p>\n
But he warned that the increase in stock prices on Thursday
\nwould not be sustained for long since the country's economic and
\npolitical situations were still volatile.<\/p>\n
"Investors will not really want to stay long in the local
\nmarket until they really see some good news coming down," he
\nsaid.<\/p>\n
Most large-cap stocks rallied on Thursday, with market leader
\ntelecommunications firm PT Telkom gaining Rp 175 to close at Rp
\n1,600 on 54.78 million shares traded. (aly)<\/p>",
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