Rupiah breaches 8,000 level as stocks slide

JAKARTA (JP): The rupiah fell on Monday, breaching the 8,000 level against the U.S. dollar in very thin trading, as stock prices also lost ground, falling 0.5 percent, currency dealers and stockbrokers said.

Currency dealers said the rupiah, which closed at 7,950 on Friday, failed to hold its ground as it was undercut by fresh dollar bids by state banks.

They said that in a market already deserted by offshore players, any fresh dollar demands could undermine the local unit.

The rupiah closed trading at 8,050 against the American dollar on Monday.

A chief dealer at a local private bank said that most offshore players were hesitant to enter the market because of the country's social and political developments.

"Recent violence in the country's major cities has made offshore operators scared to enter the country," the dealer said.

Outbreaks of violence in several major cities around the country helped knock down the rupiah, making it the only currency in the region to weaken against the dollar.

Other regional currencies, spurred by a stronger Japanese yen, gained ground against the dollar on Monday. The yen shot up to 109 against the greenback.

Dealers said they expected that trading on the rupiah would remain thin, ranging between 8,000 and 8,300, ahead of the Muslim Idul Fitri holiday.

Mirroring the rupiah, stock prices on the Jakarta Stock Exchange (JSX) fell 2.198 points, or 0.5 percent, to close at 437.296 on a total turnover of 178.46 million shares valued at Rp 234.23 billion.

Decliners led advancers 50 to 25 with 92 stocks unchanged.

Merrill Lynch Securities Indonesia, SBC Warburg, Jardine Fleming Nusantara and GK Goh Ometraco Securities were among the sellers on Monday, she said.

"We predicted such profit taking because the rise in local stock prices last week was not supported by strong fundamentals," Vonny Juwono, a broker at Trimegah Securindolestari said.

A BNI Securities analyst, Fitri Murniati, said foreign fund managers also joined the profit taking because they had no reasons to continue holding local stocks.

"Foreign investors tend to realize their profits quickly because they are worried about the country's political condition," Fitri said.

She said that the mood ahead of the Idul Fitri holiday, when most traders would go on vacation, also caused trading volume to shrink.

"Some traders are already in the holiday mood," Fitri said. (aly)