Rupiah climbs on market optimism as stocks gain
Rupiah climbs on market optimism as stocks gain
JAKARTA (JP): The rupiah strengthened for the third
consecutive day yesterday on optimism that proposed financial aid
from the International Monetary Fund (IMF) would help mend the
country's monetary problem.
Currency dealers said that the rupiah rose sharply in late
trading yesterday breaking the psychological level of 3,400 to
close at 3,355/65 against the opening of 3,470/90 in the morning.
Currency dealers attributed the improvement of the rupiah to
IMF's positive response to the Indonesian proposal and to dollars
being sold by overseas fund managers, including the Quantum Fund
controlled by George Soros, as well as profit taking by some
domestic operators.
"The market has seen a sale of dollars by overseas operators,
including financier George Soros," a local bank dealer said
yesterday.
Foreign exchange dealers said a meeting between Minister of
Finance Mar'ie Muhammad and Bank Indonesia governor J. Soedradjad
Djiwandono with foreign fund managers helped build the market
sentiment.
Mar'ie and Soedradjad briefed fund managers yesterday about
the government's priority program in fixing the monetary problem.
"Though no clear financial package has been announced yet, the
meeting has helped restore investor confidence in the
meantime ... allowing the rupiah to gain ground," one local
dealer said.
President director of Bank Internasional Indonesia (BII) Indra
Widjaja said yesterday that the Indonesian government had made a
very wise and prudent move to seek help from the IMF.
"Why should we be ashamed of seeking help if such help
restores the country's economy?" he asked.
Currency dealers said the rupiah had strengthened to 3,310
against the greenback in midday trading but slid in the afternoon
on a fresh demand for the dollar.
"The market expects the rupiah to strengthen to between 2,950
and 3,100 in early trade next week," a local bank chief said
yesterday.
Indonesia's rupiah has lost over 35 percent of its value
against the U.S. dollar since early July.
Currency dealers said Bank Indonesia did not intervene in the
market yesterday like it did the previous three days.
"It's a psychological game now. Maybe the news about seeking
help from the IMF has already been strong enough to mend public
confidence, which has faded over the past few weeks," a dealer
said.
Stock prices on the Jakarta Stock Exchange also bore fruit of
the strengthening rupiah with the main price gauge rising 2.6
percent or 13.64 points to close at 534.75 points yesterday.
Total turnover was 555.4 million shares in the regular market
valued at Rp 608.6 billion (US$181.1 million)
Other Southeast Asian currencies also consolidated further
against the U.S. dollar, enjoying a reprieve after a turbulent
few months since a currency turmoil erupted in the region.
The rebound boosted regional stocks but analysts said currency
volatility could return if two awaited events -- the unveiling of
the Malaysian budget and Thailand's financial rescue plan --
disappointed the fickle markets.
The Malaysian ringgit closed at 3.0670, up from 3.0825, while
the Singapore dollar strengthened to 1.5330 from 1.5380 the day
before, AFP reported.
The Thai baht firmed to 35.60 from 35.70 and the Philippine
peso closed at 33.52, up from 34.12, after spiking to 32.93,
forcing a break in trading under new rules that imposed a
cooling-off period if the currency moved 3.5 percent either way.
The regional currency crisis began on July 2 when the baht's
de facto devaluation devastated confidence in the entire region.
Since then regional currencies have hit record lows, with the
rupiah losing more than half of its value at one point. After
gains this week, the rupiah was 38 percent lower than its level
on July 1. (aly)
Table: Southeast Asian Currencies
July 1 Oct. 10 Pct. Fall
Baht 24.70 35.60 -44%
Rupiah 2,433 3,360 -38%
Peso 26.37 33.52 -27%
Ringgit 2.5245 3.0670 -21.5%
Sing. dollar 1.4300 1.5330 -7.2%