Rupiah, stocks fall on riots, regional weakness<\/p>\n
JAKARTA (JP): The rupiah and local stock prices weakened
\nyesterday despite the government's announcement on project
\nrescheduling, dealers and brokers said.<\/p>\n
Both foreign exchange and stock markets seemed to be riding
\nmore on regional weakness sentiments and fresh rioting in
\nUjungpandang, South Sulawesi, they said.<\/p>\n
Spot rupiah weakened to a low of 2,955 against the U.S. dollar
\nfrom an opening of 2,930\/2,938 before settling at 2,948\/2,952 at
\nyesterday's close.<\/p>\n
Sustained regional weakness and concern that the Ujungpandang
\nriots might spread kept the rupiah under pressure and caused
\nrelatively heavy bidding on the U.S. greenback, dealers said.<\/p>\n
They said one-week swaps declined while others were relatively
\nstable, with liquidity improving further.<\/p>\n
Overnight swap was at 1.3\/1.5 points and tom\/next at 1.1\/1.2
\npoints. One-week swap edged down to 7.0\/7.5 from 9\/15, one-month
\nwas at 38\/43, two at 75\/80 from 80\/85, three at 105\/110, six at
\n200\/215 and one-year at 375\/390 points.<\/p>\n
Meanwhile, the Jakarta Stock Exchange composite index slipped
\n2.89 percent to 534.83 points at yesterday's close despite a 0.5
\npercent gain at the opening in anticipation of the retrenchment
\nprogram.<\/p>\n
Total trading turnover was 356.7 million shares worth Rp 392.1
\nbillion (US$133.4 million).<\/p>\n
Stock dealers said reports of a riot against ethnic Chinese in
\nUjungpandang, South Sulawesi, Monday and Tuesday may also have
\nbeen partly behind the sell off.<\/p>\n
They said the government's retrenchment program should have
\nsent a positive signal to the market, but it failed to lift the
\nmarket.<\/p>\n
\"What the government announced this morning is very positive.
\nBut I don't know if foreign investors still want something else,
\nlike the postponement of the national car project,\" said an
\nanalyst at a local securities house.<\/p>\n
Minister of Finance Mar'ie Muhammad announced before a
\nparliamentary plenary session yesterday that the government would
\npostpone projects worth Rp 42 trillion (US$14.2 billion) and
\nreview others worth Rp 63 trillion until the region's financial
\ncrisis died down.<\/p>\n
Banking stock analyst with Morgan Grenfell Asia Indonesia,
\nMirza Adityaswara, said yesterday's announcement did not come as
\na surprise.<\/p>\n
\"We have known that the government would reschedule some big
\nprojects, that it would continue to lower interest rates, that it
\nwould do this and that. But still, it will take some time for
\nIndonesia's economy to recover,\" Mirza said.<\/p>\n
Although Bank Indonesia, the central bank, will continue to
\ncut rates on its short-term SBI papers, for instance, the rates
\nwill not reach the level before speculative attacks on rupiah in
\nearly July.<\/p>\n
Mirza predicted that one-month SBI rates would not reach 10.25
\npercent recorded last July and would likely settle at somewhere
\nbetween 16 percent and 19 percent.<\/p>\n
Banking lending rates would, at best, decline to 23 percent to
\n25 percent -- far from the 17 percent to 20 percent level before
\nJuly.<\/p>\n
\"It means slower economic growth, lower corporate earnings and
\nswelling problem loans and the market has not discounted all of
\nthose possibilities,\" Mirza said.<\/p>\n
He predicted the market would still be volatile in the short-
\nterm, depending on the direction of the rupiah exchange rate and
\nbanking borrowing rates. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-stocks-fall-on-riots-regional-weakness-1447893297",
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