Rupiah and stocks stabilize on BI move
Rupiah and stocks stabilize on BI move
JAKARTA (JP): The rupiah and stock prices stabilized yesterday
following Bank Indonesia's sporadic intervention in the currency
market, dealers said.
The rupiah strengthened to close at 3,680/95 against the U.S.
dollar in the spot market after plunging to a record low of 3,850
on Monday.
Currency dealers said the rupiah opened quite high at 3,600/85
due to a firmer close in New York and London overnight. The
currency even strengthened in early trade to a high of 3,475.
"The market sentiment was still very much influenced by the
central bank's continuing intervention, though very small," said
a state bank dealer.
Currency dealers said the central bank emerged occasionally to
sell dollars in small amounts, totaling about US$100 million.
This kept operators wary of getting caught too long with dollars.
But they said the rupiah was still fragile because of a
continued dollar demand by local operators.
The strengthening rupiah had injected a fresh mood into
trading activities on the Jakarta Stock Exchange, with the
composite index improving 0.21 percent to close at 513.95 points.
Turnover totaled 313.37 million shares worth Rp 379.86 billion
(US$102.6 million).
Fadjar Limin Sutandi, head of research at Sigma Batara
Securities, said the direction of stock trading activities was
still dictated by the currency market.
"If the rupiah strengthens, stock trading will strengthen, and
if the rupiah weakens, stock trading will weaken too," he said.
Stock analysts said they still could not assess how companies
were performing because of the rupiah's continued volatility, but
added that third-quarter corporate results should give clues to
the impact of the currency crisis on balance sheets.
They said corporations would continue to enter the currency
market to hedge their outstanding offshore debt, and this process
would take time due to a large amount of such debt and a thin
market.
Martin P.H. Panggabean, an economist from Lippo Securities,
suggested that the government set up another offshore loan team
to arrange private corporate debt.
"We currently have a team to monitor and arrange offshore
loans for the government and/or state related projects, but not
for private projects. In the long run, we need to create a new
team to arrange private borrowing," he said.
This new team, he said, was necessary because the monetary
crisis was partly prolonged by an excessive dollar demand from
private companies with mounting offshore debt.
He said it was also important for the government to monitor
and announce periodically the total amount of short-term debt of
private companies in Indonesia to reduce speculation.
"What happens now is that everybody comes up with their own
figures. This increases speculation among overseas players and
weakens the rupiah," he said.
Currency dealers said the market was relatively calm yesterday
following government assurance that it would maintain a free
foreign exchange regime.
The market, they said, also anticipated a further move by the
government, which the market expected to be announced today after
a monthly cabinet meeting.
Minister/State Secretary Moerdiono said on Monday that the
government would inform the people in coming days about measures
to ensure the continuity of economic activities amid the currency
crisis.
Dealers said the market also anticipated possible tightening
of rupiah liquidity in the market following the central bank's
intervention in the spot market.
They said the liquidity supply was sufficient yesterday, but
increased demand from state banks was keeping overnight rates at
a high level.
A balance of Rp 747 billion was available to the market from
maturing central bank's short-term paper, SBIs. (aly/rid)
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