Market intervention fails to shore up rupiah
JAKARTA (JP): Market intervention by Bank Indonesia, the central bank, failed to shore up the rupiah yesterday as demand for U.S. dollars by local companies remained high.
Meanwhile, stock prices on the Jakarta Stock Exchange (JSX) were stable, with the composite index practically unmoved.
Currency dealers said the rupiah recovered slightly in late trading after the central bank stepped in the currency market to prevent the rupiah from falling further.
A chief dealer with a local private bank said Bank Indonesia intervened in the market with limited dollar selling when the rupiah was at 5,300 against the dollar.
"With the intervention, the rupiah quickly rose to 4,920," the dealer said.
But currency dealers said high demand for the dollar by local corporations to pay their dollar-denominated debts and by some individual investors for speculation prevented the rupiah from gaining ground.
"Demand by local companies either to pay their foreign debts or for speculative reasons were still high, pushing the rupiah down a bit against the dollar," the chief dealer said.
Dealers said the spot rupiah closed weaker at 5,250/5,400 in Jakarta and 5,300/5,400 in London against an opening of 5,000/5,200 in the morning.
Stock prices on the JSX gained less than 1 percent yesterday, with the composite price index closing 1.48 points higher to 398.04 points.
Over 587.1 million shares changed hands on the regular market valued at Rp 533.17 billion (US$106.63 million).
Stockbrokers said trading activities were thin with most activities marked by window dressing.
"The trading was marked by heavy cross-trading with most stock prices moving up aggressively due to window-dressing activities," head of sales at BZW Niaga Securities Adnan Tan told The Jakarta Post yesterday.
Tan said that since most investors were on their yearend leave, there would be no large transaction activities today.
The stock market will still be open all day today, the last trading day for 1997, while the currency market will be open only for a half day.
The stock and currency markets will close on Wednesday and Thursday for New Year's holidays and will open again on Jan. 2. (aly/rid)
Currencies -- Page 11