Weak rupiah, political tension send stocks tumbling down<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Jakarta shares plunged on Friday amid lingering worries of the
\nsharp depreciation in the value of the rupiah against the U.S.
\ndollar and rising political tension ahead of next month's
\npresidential election.<\/p>\n
The Jakarta Stock Exchange Composite Index fell by 2.9
\npercent, or 21.105 points at 697.937, which was slightly higher
\nthan its intra-day low of 689.536.<\/p>\n
Falls led gainers 87 to 14, with 57 stocks unchanged. Volume
\nwas at 1.3 billion shares valued at Rp 1.3 trillion (US$137.57
\nmillion).<\/p>\n
Traders said that foreign investors sold shares heavily after
\nthe rupiah tumbled to around Rp 9,540 per dollar at one point
\nduring the day. Suspected central bank intervention managed to
\nlift the local unit, and closed at Rp 9,465, little changed from
\nWednesday's close of Rp 9,470. The local financial market was
\nclosed on Thursday for a public holiday.<\/p>\n
The rupiah has been the worst performing currency in the Asia
\nregion, falling by around 11 percent so far this year. A sharp
\ndrop in the value of the rupiah would hurt companies as it would
\nbe more expensive to import raw materials and costly to repay
\nmaturing foreign debts.<\/p>\n
Concerns over the domestic political situation, high global
\ncrude oil prices and losses in many Asian markets after Wall
\nStreet's fall overnight added to the negative sentiment.<\/p>\n
\"There was heavy selling,\" said a trader with Paramitra
\nSecurities as quoted by Dow Jones.<\/p>\n
\"Some investors may be thinking it's time to play it safe and
\nswitch out of Indonesian assets,\" Paula Komarudin, who helps
\nmanage the equivalent of $1.1 billion in assets at PT Manulife
\nAsset Management, was quoted by Bloomberg..<\/p>\n
Bluechip telecommunications firm PT Telkom and bank shares led
\nthe Friday fall in the local stock market, the fourth consecutive
\ndrop this week.<\/p>\n
Telkom, the country's largest telecom firm and the largest
\ncounter in the exchange, dropped by 5.5 percent, or Rp 400 to Rp
\n6,850 per share. Telkom had a $424.3 million debt in US dollars,
\nmore than a third of its total debt.<\/p>\n
Meanwhile, Bank Mandiri, the largest bank in the country,
\nplunged 6.3 percent, or Rp 75 to Rp 1,125.<\/p>\n
Dealers attributed the selling of banking shares to the
\ncentral bank's plan to increase the reserves requirement for
\ncommercial banks to defend the rupiah.<\/p>\n
In addition to economic factors both at home and overseas, the
\nrupiah has been badly affected by rising political tension at
\nhome as the month-long campaign for the country's first direct
\npresidential elections began on Tuesday, resulting in worries
\nabout possible clashes among political supporters.<\/p>\n
Nervous companies continued to buy dollars on fears the local
\nunit would continue to decline amid the political uncertainty.<\/p>\n
\"Local companies continued amassing dollars as they expect the
\nrupiah to remain under pressure ahead of the July presidential
\nelection,\" a dealer said. \"Bank Indonesia seems to be the main
\ndollar supplier today.\"<\/p>",
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"sponsor": "Okusi Associates",
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