Rupiah boosted by news of IMF loan disbursement
JAKARTA (JP): The rupiah rose again to 8,450 against the U.S. dollar on Friday and local stock prices inched down 0.4 percent on profit taking, currency dealers and stockbrokers said.
They warned, however, that sentiment on the local financial market remained bearish in the run up to the Special Session of the nation's highest legislative body, the People's Consultative Assembly (MPR), on Nov. 10 to 13.
They said the market would be very quiet next week as investors would stay on the sidelines during the MPR Special Session.
If the session went by peacefully, the rupiah and local stock prices would definitely rise in tandem, they said.
A dealer with a local private bank said the rupiah was boosted especially by news that the IMF would soon disburse US$1 billion in funds for Indonesia, possibly next week.
Such news had driven foreign operators to sell dollars to reduce their long-term dollar position, he said.
"This time it was offshore operators selling the dollar. I think at one point they did this just to take profits. Besides, they also want to reduce their long dollar position ahead of the disbursement of IMF money," he said.
The government said on Thursday that the IMF board would convene on Friday to decide the fate of loans for Indonesia and would likely disburse them next week.
However, some analysts did not expect the IMF to disburse funds when Indonesia had a critical political event like the MPR Special Session.
The MPR will set the date for the general election for the middle of next year. A lot of groups are planning to stage demonstrations in Jakarta during the Special Session, making the currency market nervous.
"The market is increasingly nervous. Market players chose to stay long on the dollar rather than the rupiah," the dealer said.
The rupiah was fairly stable in moderate dealing on Friday. The currency closed in Jakarta trading at 8,450 to the dollar, slightly stronger than its Thursday close at Rp 8,600.
The rupiah, however, ended the week lower than last week when it closed at Rp 7,700.
As the rupiah strengthened, stock prices on the local market lost 0.4 percent, with the JSX Composite Index falling 1.55 points to 353.978.
Trading turnover totaled 289.22 million shares changing hands at Rp 412.19 billion.
Stockbrokers and analysts said a slight decline in share prices was mainly attributable to investors' profit-taking on the gains they made in the previous days.
Besides that, certain investors had started to unload their stocks on lingering fears of possible violence ahead of the Special Session of the MPR.
Panin Sekuritas' head of research, Anton Karlam, said that investors just "think in simple terms and sell stocks in times of uncertainty."
He said only short-term investors and risk takers would be trading next week.
A broker with Trimegah Securindolestari said that some foreign fund managers started to cash in profits on Friday.
"After purchasing stocks aggressively during the last few days, they were net sellers today," she said.
Head of research of Sigma Batara Securities, Fadjar Limin Sutandi, said certain foreign investors had actually allocated a certain portion of their funds to the country's market despite lingering worries in the run-up to the Special Session.
"I think some investors are shrugging off the political uncertainties before the Special Session," he said.
But the general tone remain gloomy as most domestic and local investors would take a more cautious attitude in the coming days, he said.
Brokers and analysts concurred that massive student rallies in the city on Friday dampened market sentiment.
They said such student demonstration discouraged investors from the local market. They mostly feared that such demonstrations would turn violent in a fashion similar to the bloody May riots which toppled former president Soeharto. (aly/rid)