Local financial mart caught in regional rut
Local financial mart caught in regional rut
JAKARTA (JP): The local financial market teetered again on
Monday with the rupiah weakening to 8,550 against the U.S. dollar
and stock prices sliding 1.4 percent.
Currency dealers said most offshore operators dumped the
rupiah for the whole trading day following the yen's slide
against the U.S. dollar.
Dealers said state-owned banks were seen selling dollars at Rp
8,920 down to Rp 8,850, to defend the local unit.
"Foreign banks started the day's trading buying dollars. I
think the factor is very much regional," a dealer with a local
private bank said.
"This action forced state banks to step into the market,
selling the dollar when it reached Rp 8,925. This pushed the
rupiah back below 8,900."
The rupiah closed at 8,850 against the greenback in the spot
market here, slightly weaker than Friday's close at 8,700.
An analyst with a local securities house said the market was a
bit disappointed that the government could not secure larger
loans from Japan to plug the deficit in the next state budget.
Japan's deputy finance minister for international affairs,
Eisuke Sakakibara, said Friday that Japan was committed to
providing Indonesia with a US$2.4 billion loan.
"This means that the government has to go a long way to the
World Bank, the Asian Development Bank and even the International
Monetary Fund to help finance the gap," the analyst said.
Dealers said the market would continue to test the rupiah in
the coming days as the central bank is expected to continue
defending the currency. The resistance level of the rupiah is
seen at 9,000 to the dollar.
Following the rupiah's slide, local share prices dropped 1.4
percent as foreign investors continued discharging their
investment holdings here.
The Jakarta Stock Exchange composite index closed down 5.863
points at 399.690.
Trading volume totaled 149.78 million shares worth Rp 222.93
billion changing hands.
Stockbrokers and analysts attributed the fall in local stock
prices to regional bearishness, and the weakening trend of the
rupiah.
An institutional sales broker at Trimegah Securindolestari,
Vonny Juwono, said the fall in the local market was exacerbated
by the fall in the heavyweight PT Telkom, which accounts for some
17 percent of local market capitalization.
"We just lacked positive incentives to start buying," she
said.
Bahana Securities associate director and head of equity sales,
Andre Cita, said foreign investors who came into the local market
in the last few weeks are now unloading their investment holdings
due to various economic and political concerns.
"We haven't touched the bottom, and we don't know where the
bottom is. You know there are still concerns about the currency,
social unrest, and so on.
"Those concerns are reflected in the stock market, and foreign
institutional investors are on the selling side today," he said.
He said those investors backed local stocks a few week ago
when they expected that the rupiah to strengthen. But now, they
have started to doubt it and see the risk that the rupiah is
getting weaker.
"They don't want to take that risk, so today, they are selling
their stocks."
Cita said the outlook for the local market would remain gloomy
in the short term. Unless, there are some positive surprises, the
outlook would not change.
"So, there is a cloud hanging over the Jakarta Stock
Exchange." (rid)