Poor sentiment in region hits rupiah, stocks

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.