Rupiah breaks 5,000 barrier against the U.S. greenback

Rupiah breaks 5,000 barrier against the U.S. greenback

JAKARTA (JP): The rupiah and the stock market plunged to new
uncharted lows yesterday on regional weaknesses and news that
President Soeharto would cancel his trip to Kuala Lumpur, dealers
and stockbrokers said.

They said the cancellation of Soeharto's trip revived
speculation about his health, forcing the rupiah to break the
5,000 barrier to a new record low of 5,225 against the U.S.
dollar in the spot market.

Share prices on the Jakarta Stock Exchange fell 7.6 percent.

"After a two-day respite, concerns over President Soeharto's
health again overwhelmed the market, which forced the rupiah to a
very unrealistic level," said a state bank chief dealer.

"The rupiah was also dragged down by regional weaknesses which
were driven by the falling South Korean won," added a local
private bank dealer.

The rupiah's plight was made worse by poor dollar liquidity,
allowing players to push it down sharply with transactions as
small as US$1 million.

The rupiah, which opened at 4,640/80 to the dollar, crossed
the 5,000 barrier to a record low of 5,150 immediately after
Minister/State Secretary Moerdiono announced the cancellation of
Soeharto's trip, dealers said.

They said the rupiah was knocked down further in the afternoon
to another low of 5,225 after the London market opened.

The rupiah closed at 5,120/5,220 on the Jakarta market.

The state bank chief dealer said Singaporean players
intentionally pushed the rupiah down yesterday as most domestic
players stayed on the sidelines.

"I think they used the Soeharto issue to further press down
the rupiah. Well, let them play, make gains and take the losses.
We better take to the sidelines in this situation. It's useless
to confront them," the dealer said.

Dealers said Bank Indonesia was not seen intervening in the
spot market yesterday, which they described as a tactical move to
let the market absorb the losses.

They said trading volume was extremely light yesterday, with
operators easily sending the rupiah down sharply with only one
million dollars.

Dealers said sentiment over the rupiah remained weak, with the
outlook seen as gloomy as the financial disaster in South Korea
intensified.

The panic in the currency market spread to the Jakarta Stock
Exchange, which saw its composite index tumble 30.26 points to a
four-year low of 365.85.

Trading turnover totaled 649.83 million shares worth Rp 557.83
billion ($109.4 million).

Stock brokers said the cancellation of Soeharto's trip to
Kuala Lumpur created a very negative sentiment in the stock
market, already susceptible to negative rumors.

"All foreign investors dumped their local stocks when the
rupiah sank to another new low yesterday after Moerdiono
announced that the President would cancel his trip to Kuala
Lumpur," a local securities house head of sales said.

"All people are desperate now," he said.

The head of research at Sigma Batara Securities, Fadjar Limin
Sutandi, said concern over the President's health, coupled with
weak regional markets, had forced local investors to follow
foreign investors in abandoning their stock investments.

"When foreign investors make a major sell-off, local investors
follow them because they lose confidence in the local stock
market," he said.

Fadjar predicted that the main price index would likely fall
further, probably to the 350 level as the new year approached.

"I think we will not be so surprised to see the index fall to
350 by the end of this year," he said, adding that some foreign
fund managers and investors had started to take their annual
holiday leave.

Share prices dropped almost across the board yesterday.

State-run domestic telecommunications firm Telkom closed Rp
275 weaker at Rp 2,500, while international telecommunications
operator Indosat climbed Rp 25 rupiah to Rp 9,050.

Cigarette producing giant Gudang Garam slipped Rp 600 to Rp
4,000, and competitor Sampoerna fell Rp 600 to Rp 4,000.

Bank International Indonesia slipped Rp 75 to Rp 350, Bank
Negara Indonesia fell Rp 75 to Rp 475 and Bank Dagang Nasional
Indonesia dropped Rp 50 to Rp 350. (aly/rid)

ABRI -- Page 2

Currencies -- Page 11