RI markets strengthen on regional rally
RI markets strengthen on regional rally
JAKARTA (JP): Indonesian financial markets strengthened
yesterday, boosted by high expectations across the region over a
new Japanese economic stimulus package designed to lift the
regional market.
The regional market "celebrated" yesterday the anniversary of
the start of the Asian financial crisis sparked by a de facto
devaluation of the Thai baht.
Currency dealers said the rupiah strengthened to 14,575
against the U.S. dollar in morning trading on the Jakarta market,
but then weakened to 14,600/700 at the close as the Japanese yen
slid to 140 against the dollar from 138 in the morning.
The rupiah closed at 14,650/700 on Wednesday.
"Today, the factors are totally regional. No fundamental
factors come from the domestic side," a dealer with a local
foreign exchange bank said.
He said the market was still quiet since demand for the dollar
at its current level was practically nonexistent.
Dollar demand from commercial banks has diminished because
most settled their offshore interbank debts and trade finance
arrears by June 30, some with the help of Bank Indonesia.
Corporate demand for dollars also eased following the
implementation of the Frankfurt corporate debt arrangement this
month, which has started to provide some relief to local
corporations suffering from large offshore debts.
The market also anticipated the disbursement of the next US$1
billion tranche from the International Monetary Fund, which will
be followed by other multilateral and bilateral loans.
Businesses and investors, however, were still concerned with
the social and political situation. Some worried the situation
could worsen since 79.4 million people already lived below the
poverty line.
Nevertheless, the strengthening of the rupiah and the regional
rally boosted share trading on the Jakarta Stock Exchange (JSX)
for a third consecutive day.
Share prices closed 2.2 percent higher, with the JSX Composite
Index rising 9.832 points to 466.373.
Trading turnover totaled 438.57 million shares valued at Rp
399.35 (US$27.2 million).
Dealers said some buying was in anticipation of an
announcement by the Japanese government that it would stimulate
its economy and clean up its banking system, a move expected to
give a boost to regional currencies, especially the Japanese yen.
Socgen-Crosby Indonesia's head of research, Goei Siauw Hong,
said the rise on the local benchmark index was a kind of
technical rebound since it was all supported by foreign buying.
"All regional markets were on the rise today. It seems to me
there was a great buying program for Asia following the
strengthening of the yen," he said.
Fresh foreign funds coming into the market this week have
countered the prevailing bearish trend, leading domestic
investors back into the market.
Hong, however, warned that the euphoria in the local market
could be short-lived since the fundamentals of the Indonesian
economy had not changed very much.
"The longer-term outlook is still gloomy. The trend shows a
decline," he said.
Most large-cap stocks continued to book gains yesterday, with
heavyweight domestic telephone firm PT Telkom rising Rp 150 to Rp
4,350 with 7.6 million shares traded.
Cigarettemaker PT Gudang Garam closed Rp 500 higher at Rp
9,650 on 1.6 million shares traded, while competitor PT HM
Sampoerna rose Rp 175 to Rp 2,350 on 17.3 million shares.
Some stockbrokers, however, warned that the benchmark index
may come off its highs today ahead of the long weekend with
domestic investors cashing in on their profits.
Indonesian financial markets will be closed Monday for a
public holiday. (rid)