Politics, fluid rupiah slowing Indonesian commodity trade
Politics, fluid rupiah slowing Indonesian commodity trade
SINGAPORE (Dow Jones): The volatility in the Indonesian
rupiah, stemming from a leadership crisis in the country, has
slowed commodities trading across the country.
Market participants are watching developments in Jakarta as
these events will likely affect the rupiah, which in turn could
influence commodities prices, traders said.
"Trading has been relatively quiet since this morning. People
are taking a wait-and-see position, watching to see the result
today," said a Jakarta-based palm oil trader.
Indonesia's House of Representatives is still meeting
Wednesday. In the latest development, a vote ordering the
impeachment of President Abdurrahman Wahid looked certain to be
passed by Indonesia's Parliament Wednesday after its two largest
parties, representing a majority of lawmakers, formally backed
the move in a debate.
The rupiah started to rebound Tuesday after news that Vice
President Megawati Sukarnoputri's party will back the
Parliamentary session Wednesday to call for impeachment of Wahid.
At 0830 GMT (3.30 p.m. Jakarta time) Wednesday, the dollar was
trading at Rp 11,250, compared with Tuesday's intra-day high at
Rp 11,635.
Cocoa farmers in the Indonesian province of South Sulawesi
have been holding back beans in the last couple of days because
of the volatile rupiah along with lower values in New York cocoa
futures, said a Singapore-based trader.
The sudden rebound in the rupiah also has limited trading in
its domestic coffee market as exporters find coffee too expensive
to buy at the moment, traders said.
A strong rupiah means exporters would have to pay more rupiah
for every metric ton of coffee they buy.
Indonesia grade four robusta coffee, basis free-on-board
Lampung, was quoted around Rp 4,400 per kilogram, compared with
Rp 4,200-Rp 4,300/kg last week.
Offers were few in the Indonesian rubber market, with sellers
sidelined awaiting news of the impeachment outcome, traders said.
Offers for standard Indonesian rubber 20 grade were nominally
assessed at 50.20-50.70 cents a kilogram, free-on-board basis for
July shipment.