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.