Stock prices surge but rupiah falls<\/p>\n
JAKARTA (JP): The rupiah descended sharply to 9,550 against
\nthe American dollar yesterday on a combination of political
\ntensions and mounting concerns over the private sector debt,
\ncurrency dealers said.<\/p>\n
However, the weakening rupiah did not riddle the stock market
\nas stock prices on the Jakarta Stock Exchange (JSX) rose 6.06
\npercent after five local private banks announced a merger,
\nbrokers said.<\/p>\n
The announcement of the planned merger among listed Bank
\nInternasional Indonesia (BII), Bank Dagang Nasional Indonesia
\n(BDNI), Bank Tiara Asia, and unlisted Bank Sahid Gajah Perkasa
\nand Bank Dewa Rutji failed to keep the rupiah on an upward trend
\nagainst the greenback.<\/p>\n
The merged bank -- which will retain the BII brand name --
\nwill constitute the country's largest listed private bank with
\ntotal assets of Rp 50 trillion (US$5.55 billion) and total equity
\nof Rp 5 trillion.<\/p>\n
"It's just a bit strange to see the movement of the rupiah
\ntoday (yesterday). It stabilized in the morning session before
\nplunging to almost 10,000 after lunch break," a local private
\nbank chief dealer said.<\/p>\n
The spot rupiah closed at 9,550\/9,750 to the dollar against an
\nopening of 8,600\/8,800 in the morning before nose-diving to 9,900
\nafter lunch break.<\/p>\n
Dealers said reports on rioting in several small towns in East
\nJava and a protest at the House of Representatives compound put
\nmore pressure on the rupiah.<\/p>\n
Attacks on shops and rice mills were reported in the area of
\nBanyuwangi until Saturday evening, with angry mobs forcing open
\nclosed shops and dragging the shops' contents onto the streets.<\/p>\n
And yesterday, about 200 people held a protest at the House of
\nRepresentatives building, demanding that President Soeharto step
\ndown and calling on the government to reduce the soaring prices
\nof staples.<\/p>\n
"Adding to the political tension, the rupiah's fall is largely
\nattributed to foreign investors' concern about the private sector
\ndebt in Indonesia," a chief dealer said.<\/p>\n
He suggested that the government help the private sector
\nresolve the debt problem because Indonesia's monetary crisis was
\nlargely driven by the mounting private debt.<\/p>\n
"It's just a pity the government has not mentioned any
\nsolution to this problem in the economic reforms announced by the
\ngovernment last week," the dealer said.<\/p>\n
"The financial market is now waiting for a kind of solution
\nfor private sector debt, though the government has repeatedly
\npromised not to bail it out," he said.<\/p>\n
"As long as the government and the private sector don't solve
\nthis problem, it's almost impossible for the rupiah to strengthen
\nagainst the dollar," the dealer said.<\/p>\n
The government said Indonesia's overall external debt was $140
\nbillion at the end of last year. It did not mention the private
\nsector portion, but an earlier figure showed private sector debt
\naccounted for about 55 percent of the total debt.<\/p>\n
As the rupiah fell yesterday, stock prices on the JSX rose
\nsharply with the main price index rising 25.10 points to 439.02
\nfrom 413.92 on Friday last week.<\/p>\n
Over 785.01 million shares changed hands in the regular market
\nyesterday valued at Rp 754.78 billion.<\/p>\n
Brokers attributed the rise in stock prices to a positive
\nmarket response to the announcement of the planned merger of
\nthree listed banks and two unlisted ones.<\/p>\n
"The announcement shows that the government and private banks
\nare serious in boosting financial reforms," head of sales at BZW
\nNiaga Securities Adnan Tan said.<\/p>\n
An institutional broker with Trimegah Securities said foreign
\ninvestors were aggressively entering the market yesterday for
\nbanking stocks in buoyant trading transactions due to the merger
\nannouncement.<\/p>\n
"I think most blue-chip stocks are following leads in the
\nbanking sector," the Trimegah broker said.<\/p>\n
Brokers also attributed the increase to the strengthening of
\nregional stock markets.<\/p>\n
However, yesterday's trading was marred by the suspension of
\nBank Tiara stocks due to a 45 percent increase in its price to Rp
\n300 from Rp 200 at the opening. (aly)<\/p>\n
Editorial -- Page 4<\/p>\n
Debt -- Page 9<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/stock-prices-surge-but-rupiah-falls-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }