MPR session to determine rupiah's fate
MPR session to determine rupiah's fate
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on
Monday that the beleaguered rupiah should strengthen against the
U.S. dollar if the Special Session of the People's Consultative
Assembly (MPR) proceeds peacefully.
He said the rupiah's recent volatility against the American
dollar was primarily caused by rising market apprehension over
the political environment at home ahead of and during the Special
Session this week.
"If worries over the political situation are proven baseless,
I'm optimistic that the rupiah will strengthen again," he told
journalists here.
Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita added that the rupiah should improve
against the dollar following the disbursement of bailout money by
the International Monetary Fund (IMF).
"I hope the loan disbursement will strengthen the rupiah
against the dollar and improve market confidence in the
currency," he said.
The IMF approved last weekend a US$960 million loan payment to
crisis-hit Indonesia as part of its total $42 billion-plus
international package.
The government has said it would use its dollar funds to buy
rupiah in the market and thus prop the currency up. The central
bank has regularly intervened in the market through the state
banks.
Dealers said the decision by the IMF to disburse loans amid
the heightening political tension at home helped the rupiah to
remain steady on Monday, one day before the MPR started their
meeting.
They said the rupiah ended Jakarta trading at 8,450 on Monday,
unchanged from Friday's close.
The steadiness of the rupiah was also helped by easing
political pressure on the currency as students staged a peaceful
protest in the capital on Monday, allaying fears of violence in
the lead-up to the MPR session.
Investors, however, remained concerned that during the MPR
session the country could witness a repeat of the social and
political trouble that pushed Soeharto out of office in May.
A dealer with a local private bank said: "The atmosphere in
the market was again nervous today. This situation, I think, will
prevail until the MPR session ends."
He said some foreign operators surprisingly were still
unloading their dollars on Monday, showing their confidence that
the MPR session would proceed peacefully.
Dealers predicted that during the MPR session this week, the
rupiah would be traded at between 8,500 and 9,000.
Despite the mounting political tension, share prices on the
Jakarta Stock Exchange (JSX) climbed 2.9 percent on Monday, with
the JSX Composite Index rising 10.41 points to close at 364.39.
Trading turnover totaled 408.91 million shares valued at Rp
694.30 billion changing hands.
Gainers led losers by 43 to 37, with 83 stocks unchanged.
Stock brokers and analysts attributed the increase to the
government-sponsored buying program in the morning on certain
blue chip stocks.
Vonny Juwono, an institutional sales dealer with Trimegah
Securindolestari, said bullish sentiment in the morning was
capped by profit taking in the afternoon session as
antigovernment demonstrations heightened in the capital.
Johanes Salim, an analyst with Mashill Jaya Securities, said
the increase in stock prices was surprising given the country's
political apprehension prior to the MPR session.
"Foreign investors have considered investing in our market too
risky given the country's political uncertainty," he said.
"I suspect the government was behind the rise of stock prices
today." (prb/rei/aly)