Poor sentiment in region hits rupiah, stocks
Dadan Wijaksana, The Jakarta Post, Jakarta
The rupiah and stock index were down on Thursday, feeling the pinch from the bearish regional sentiment and renewed fears of violence at home mostly due to the general election campaign as outdoor campaigning kicks off on Friday.
The local unit closed weaker at Rp 8,620 per dollar, compared to 8,570 the day earlier, as the U.S. dollar edged forward against most regional currencies, with the exception of the Japanese yen.
The dollar's rise followed an earlier announcement of positive U.S. economic data, which spurred optimism about the country's economic recovery.
For the rupiah, however, the dollar's rise caused more damage, as tensions at home are expected to rise with outdoor campaigns that usually draw thousands of supporters into street rallies -- that might well turn into sporadic, if not massive, conflicts among party supporters, dealers said.
According to Bloomberg data, the rupiah has fell by 2.3 percent this year, one of the biggest declines among currencies in the Asia and Pacific countries.
"The combination of these factors convinced investors that it's better to hold onto the dollar rather than the rupiah," one dealer said, adding that the fall could have been bigger had the central bank not stepped in.
Bank Indonesia's intervention, the dealer went on, helped the rupiah regain some ground after falling to an intraday low of 8,630.
The outdoor campaign will last until April 1, four days before around 147 million voters in the country are expected to vote for legislative representatives, presented by 24 political parties, and independent regional representatives.
In the first two rounds of indoor campaigns that ended on Thursday, the events went relatively peacefully -- dashing earlier concerns of violence, reflected in the brief rise of the rupiah in recent days.
But, the concerns seem to have reemerged with the start of the outdoor activities on Friday.
On the Jakarta stock exchange, similar pressure was also seen with the Composite Index ending the trading day 1.6 percent lower compared with the previous day's closing.
The stock index ended down 11.690 points at 727.10, with the trading volume of 1.02 billion shares valued at Rp 577.47 billion (US$67.3 million).
"The gloomy sentiment in both the external and internal market, sparked the sell-off of selected blue chips," said a trader.
Telkom, the country's biggest telecommunication firm, and Astra International, the nation's largest automaker, were among the 96 decliners. Telkom closed at Rp 6,800 while Astra at Rp 5,250, or 0.7 percent and 0.9 percent lower from the previous day, respectively.
Cigarette maker giants were also down, with HM Sampoerna losing 3.2 percent of its value to Rp 4,500 and Gudang Garam 0.4 percent at Rp 12,850.
The trader said the gloomy outlook would likely remain in days to come, but bargain-hunters would slow down the pace.