Political tensions push rupiah down against dollar
Political tensions push rupiah down against dollar
JAKARTA (JP): High anxiety over the precarious situation
during the Special Session of the People's Consultative Assembly
(MPR) weighed heavily on market sentiment on Thursday, with the
rupiah closing down at 7,900 against the U.S. dollar and share
prices falling 1.3 percent.
Currency dealers said the rupiah -- which rallied on Wednesday
despite the simmering political tension -- failed to sustain its
gains as most market participants were scared to build a new
position.
"I think market participants are a bit scared to enter the
market as the political tension is getting worse," a dealer with
a local private bank said.
Dealers said the rupiah could have broken through the
psychological 8,000 level against the U.S. dollar on Thursday had
state banks not come to its defense.
The rupiah, which hit an intraday high of 7,650, finally
closed 1.9 percent lower at 7,900 against the American dollar on
Thursday, compared to Wednesday's 7,750 close.
Trading volume remained thin as most operators adopted a wait-
and-see attitude until the conclusion of the session on Friday.
As the 1,000 members of the MPR entered the penultimate day of
their meeting to set new electoral laws and determine the date
for the general election next year, thousands of students and
reform leaders stepped up their opposition to the session. They
claim it favors the ruling Golkar grouping and the military in
maintaining the leadership status quo.
They are also demanding the Assembly scrap the Armed Forces
dual socialpolitical role and prosecute former president Soeharto
for alleged massive abuse of power and corruption during his 32-
year rule.
On Wednesday, 14 people were injured when security personnel
clashed with students protesting the session. More clashes were
reported on Thursday.
Dealers said sentiment on the rupiah would remain bleak for
the rest of the week and it was predicted to descend to the range
of 8,000 to 8,500 before the weekend.
Like the rupiah, share prices on the local stock market also
declined. The Jakarta Stock Exchange (JSX) Composite Index fell
5.03 points to 356.98 on a total turnover of 439.12 million
shares valued at Rp 454.23 billion (US$57.49 million).
Losers led gainers by 80 to 20 with 82 stocks unchanged.
Stockbrokers said that the decline in stock prices was caused
by panic selling by investors who feared the growing anti-MPR
session demonstrations would cause chaos.
"We still saw some program buying in the morning, but profit
taking and panic selling in the afternoon reversed the
sentiment," sales manager of Mashill Jaya Securities Antonio
Yongnata said.
He said stocks of mining firm Aneka Tambang, Astra Agrolestari
and state telecommunication firm PT Telkom, which made gains on
preceding days, declined on Thursday.
The share price of Aneka Tambang shed Rp 50 to Rp 1,475 on
9.31 million shares, Astra Agro Lestari slid Rp 50 to Rp 2,275 on
877,500 shares and Telkom fell Rp 25 to Rp 2,450 on 38.78 million
shares.
Antonio said investors would likely continue dumping their
stocks on Friday ahead of the weekend to cash in profits on gains
made the previous day.
"The stock market is likely to decline on persistent profit
taking ahead of the weekend," he said. (aly)