Rupiah and local stocks inch higher
JAKARTA (JP): The rupiah escaped the fallout from the sliding yen and managed to inch higher on Tuesday as stock prices rebounded slightly, currency dealers and stockbrokers said.
Currency dealers attributed the rupiah's continued recovery to dollar selling by domestic state banks and market talk of a possible further U.S. interest rate cut by another 0.25 percentage basis points in the coming weeks.
"This time the rupiah did not follow the movement of the Japanese yen and managed to record a gain," a chief dealer with a local private bank said.
The Japanese currency fell to the 117 level against the U.S. dollar in afternoon Asian trading.
The rupiah opened at 7,900/8,200 against the dollar and rose to an intraday high of 7,650 before easing in late trading to close at 7,700.
Its Tuesday close was 1.3 percent firmer than Monday's close at 7,800.
Dealers said that the signing of the government's latest letter of intent with the International Monetary Fund (IMF) had also contributed to rupiah's strong footing.
"Sentiment regarding the rupiah remains positive in the short term, but its medium-term outlook remains blurred," the dealer said.
He said the resistant level for the rupiah would be 7,000. As soon as the currency hits that level some offshore operators would probably start buying dollars.
"I guess some offshore operators are now watching closely for when the rupiah hits that level," the dealer said.
Like the rupiah, share prices in the local market rose marginally on Tuesday, supported by late buying of certain selective stocks in a positive response to the strong rupiah.
"Late buying in telecommunications and cigarette stocks enabled the main index to rise. Otherwise, the index would have gone down," an institutional sales broker with Trimegah Securindolestari said.
The Jakarta Stock Exchange (JSX) Composite Index rose 0.15 points to 336.57 on a total turnover of 241.62 million shares changing hands valued at Rp 280.81 billion (US$36.5 million).
Johanes Salim, an analyst with Mashill Jaya Securities, said stocks of local corporation with huge foreign exchange debts were the main buying targets by foreign investors in the afternoon.
"With a strong rupiah, the corporations will likely have some room to service their mounting overseas debts," he said. He cited cigarettemakers PT HM Sampoerna and its rival PT Gudang Garam as some of the targeted stocks.
HM Sampoerna rose Rp 150 to Rp 3,800 on 6.93 million shares while its rival Gudang Garam rose Rp 50 to Rp 8,400 on 2.52 million shares.
However, stocks in export-oriented companies became foreign investors' selling targets following the rupiah's rise, he said.
"With a persistent appreciation of the rupiah, the gross margin of those export-oriented firms will likely decline," he said.
He singled out fishing firm PT Daya Guna Samudera and gold mining firm PT Aneka Tambang as examples.
The stock price of Aneka Tambang fell Rp 25 to Rp 1,450 on 9.66 million shares traded, and Daya Guna slid Rp 275 to Rp 4,000 on 970,500 shares. (aly)