Rupiah breaches 8,000 against dollar

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)