Rupiah strengthens, stocks hit low<\/p>\n
JAKARTA (JP): The rupiah broke the 11,000 barrier against the
\nU.S. dollar to close firmer at 10,950 in moderate trading on
\nTuesday, but local stock prices fell 4.8 percent to touch another
\nfive-year low, currency dealers and stockbrokers said.<\/p>\n
Currency dealers said Malaysia's plan to introduce foreign
\nexchange control measures and limited dollar-selling for the
\nrupiah by the country's state banks had provided more leeway for
\nthe rupiah to move ahead Tuesday.<\/p>\n
Dealers said the rupiah, which opened at 11,100 in the
\nmorning, soared to an intra-day high of 10,750 as a result of
\nMalaysia's new capital control move.<\/p>\n
\"Malaysia's new move gave a big boost to other currencies in
\nthe region, including the rupiah,\" a dealer with a local private
\nbank said.<\/p>\n
Dealers also attributed the strengthening rupiah to a strong
\nJapanese yen, which traded within a range of 137 to 138 against
\nthe greenback on Tuesday.<\/p>\n
\"But on top of that, persistent dollar-selling by state banks
\nhelped the rupiah to remain strong,\" the dealer said.<\/p>\n
Dealers said the rupiah could extend its gains as state banks
\ncontinue to sell dollars for rupiah, possibly acting on behalf of
\nthe central bank.<\/p>\n
In addition, they said the market perceived that Indonesia
\ncould also move the same direction as Malaysia did to peg the
\nrupiah's exchange rate against a major currency to reduce
\nfluctuation and help bring down interest rates.<\/p>\n
Such perceptions prompted investors to pull out their short-
\nterm investments in Indonesia, especially in equity, and convert
\nthem into U.S. dollars.<\/p>\n
Stock prices on the Jakarta Stock Exchange (JSX) tumbled 4.8
\npercent with the main price gauge sliding 16.58 points to close
\nat 325.85, a level not seen in the last five years.<\/p>\n
Trading turnover totaled 167.47 million shares changing hands
\nvalued at Rp 196.70 billion (US$17.88 million).<\/p>\n
The head of institutional sales at Mashill Jaya Securities,
\nAntonio Yongnata, said that Malaysia's move on foreign exchange
\ncapital controls to jack up the ringgit's value had triggered
\npanic selling in the regional market.<\/p>\n
\"Most investors in the region, including Indonesia, are panic
\nselling because they fear that the monetary authority in their
\nrespective countries will apply a similar move like what Malaysia
\ndid,\" he said.<\/p>\n
He said that most foreign investors continued to dump their
\nstocks, including large-capitalized stocks, in the local market
\nto avoid losses.<\/p>\n
\"Investors fear that if they put some funds in the market,
\nthey will have difficulty getting their money back,\" he said.<\/p>\n
The head of research at Sigma Batara Securities, Fadjar Limin
\nSutandi, said that the absence of positive news in the hammered
\nlocal bourse had forced most investors to shun the market.<\/p>\n
\"There are no fresh leads at all in the market. Consequently,
\nmost people continue to sell blindly,\" he said.<\/p>\n
He said the market was still plagued with negative news, like
\npoor first-half corporate results, high interest rates and
\nongoing political and social uncertainty.<\/p>\n
Both Fadjar and Antonio said that political uncertainty would
\nremain a significant factor in driving down stock prices, though
\nsome stocks had been oversold.<\/p>\n
Most blue-chip stocks fell, with market leader state
\ntelecommunications firm PT Telkom sliding Rp 325 to Rp 2,025 on
\n18.66 million shares changing hands. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rupiah-strengthens-stocks-hit-low-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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