Rupiah breaches 8,000 against dollar

JAKARTA (JP): The rupiah breached on Monday the 8,000 level against the U.S. dollar as international pressure increased over Indonesia's handling of the East Timor issue.

Currency dealers said investors dumped their Indonesian currency over concerns that the growing pressure would prompt donors to suspend loans to Indonesia.

The rupiah lost nearly 2.5 percent to end the day at Rp 8,010 against the American dollar -- its lowest level since early June -- from 7,815 at the close of Friday trading.

The East Timor issue also dragged down share prices, with the Jakarta Stock Exchange (JSX) Composite Index falling almost 4.5 percent to close at 549.42 in thin trading.

Major countries and international institutions warned Indonesia on Monday to ensure stability in the violence-wracked province.

The International Monetary Fund, which is leading a US$43 billion economic bailout for Indonesia, issued on Monday a veiled threat, saying the Indonesian government had "every interest in seeing the process in East Timor unfold smoothly and without violence, in accordance with internationally recognized norms".

Bank Indonesia (BI) Governor Sjahril Sabirin also acknowledged that the weakening of the rupiah against the U.S. dollar was directly related to the situation in East Timor.

He acknowledged that the central bank had intervened in the market to prevent the market rate from moving unrealistically out of proportion due to the political instability.

He said BI sold $5 million on the day to arrest a further drop in the Indonesian currency.

Sabirin said the current ideal level for the rupiah exchange rate against the greenback was between Rp 6,000 and Rp 7,000 per dollar.

Mirroring the rupiah, stock prices on the Jakarta Stock Exchange fell 24.76 points, or 4.38 percent, to close at 540.42 in thin trading with a total value of only about Rp 300 billion.

Vonny Juwono, a broker at PT Trimegah Securindolestari, said that foreign investors, the main market players in the local stock market, mostly sold their blue chip stocks.

She said the instability in East Timor was affecting the market.

"There is certainly the East Timor factor, which led to the drop in share prices."

Vonny said trading on the JSX in coming days would continue to remain thin and bearish.

She said that the trading value was below Rp 400 billion.

Vonny said the East Timor issue had overshadowed the potential market effects of the companies' good results in the first half in financial reports recently released to the public.

At the close of trading, shares of state-owned telecommunication companies were down. PT Telkom lost 6.2 percent, or Rp 175 to Rp 2,650, and PT Indosat fell 1.7 percent, or Rp 200 to Rp 2,650.

Cigarette manufacturer PT Gudang Garam lost 9.1 percent, or Rp 1,700 to Rp 17,000, and its competitor HM Sampoerna fell by 4.2 percent, or Rp 650 to Rp 15,000.

The most actively traded Bank Lippo shares fell 13 percent, or Rp 25 to Rp 175. (udi)