Rupiah closes 4% higher while stocks gain 1.3 percent

Rupiah closes 4% higher while stocks gain 1.3 percent

JAKARTA (JP): The country's financial market gained footing on
Wednesday with the rupiah advancing 4 percent to close at 8,450
against the U.S. dollar and stock prices rising 1.3 percent.

Currency dealers attributed the strong rupiah to the rise of
the Japanese yen against the American dollar and a relatively
stable social climate in the country.

"I think a strong yen was the main reason behind the rise of
the rupiah," a dealer with a local private bank said.

The Japanese yen was traded at 112.15 against the American
dollar on Wednesday, firmer than its Asian close at 115.02 the
previous day.

Currency dealers said the rupiah, which opened at 8,675/8,750,
continued to advance against the American dollar following the
central bank's move to intervene in the market through state
banks.

State banks were seen selling dollars at 8,675 and 8,600
levels, which shocked offshore operators who had built up long
dollar positions.

"Offshore operators did not expect the rupiah to break the
8,600 level as they were caught long off dollars. This triggered
cut-loss moves among offshore operators after the rupiah broke
through the 8,600 level," said Chris V. Koemolontang, a chief
dealer with a joint venture bank in Jakarta.

He added that the rise of the average rate of Bank Indonesia's
one month promissory notes (SBI) to 36.97 percent in the weekly
auction on Wednesday from 36.53 percent last week had also
provided a strong boost for the rupiah.

"Such an increasing interest rate will make the rupiah look
more attractive for foreign investors," Chris added.

In addition, dealers said Indonesia's huge trade surplus of
over US$20 billion for the first months of this year -- resulting
from lower imports -- also gave an additional boost to the
currency.

Nevertheless, dealers warned that the strengthening of the
rupiah was still fragile as the country's social and political
tension is poised to heighten.

Taking the lead of the rupiah, share prices on the Jakarta
Stock Exchange (JSX) rose 1.3 percent, with the JSX Composite
Index ascending 5.39 points to close at 410.55.

Trading turnover totaled 279.77 million shares, valued at Rp
300.77 billion.

Gainers led losers 50 to 37 with 85 stocks remaining
unchanged.

Stockbrokers and analysts said the absence of antigovernment
demonstrations and the rise of the international call operator PT
Indosat's share price following its better-than-expected profits
had provided a buying impetus for investors in the local bourse.

"I think a strong rupiah and the rise of the Indosat was the
main reason for the rise in the local stock market," Antonio
Yongnata, an institutional sales manager at Mashill Jaya
Securities, said.

Indosat's share price rose Rp 525 to Rp 11,725 with a total of
3.85 million shares changing hands.

Indosat announced Wednesday that its net profit soared to Rp
1.16 trillion in 1998 compared to Rp 640.8 billion in 1997, and
its total revenue rose by 44 percent to Rp 2.10 trillion in 1998
from Rp 1.45 trillion the year before.

Stock brokers said that the buying mood in Indosat had forced
domestic investors to start picking up other blue chip stocks
which had been under selling pressure, like cigarette makers PT
Gudang Garam and PT HM Sampoerna, as well as mining firm PT Aneka
Tambang.

Gudang Garam's share price rose by Rp 600 to Rp 11,500 on 1
million shares traded, HM Sampoerna was also up by Rp 150 to Rp
5,950 on 702,500 shares and Aneka Tambang was up by Rp 50 to Rp
1,525 on 9.54 million shares moved.

Stock brokers said that Wednesday's movement of the share
prices in the local battered market, unlike in previous days, was
not dictated by the regional equity markets.

"It is surprising that while other regional equity markets
were mostly down, our market is on the upward trend," Imelda
Kwan, an institutional sales broker with Trimegah
Securindolestari, said.

But most stock brokers said fears over social unrest
approaching the general election in June could undermine the
short-lived bullish sentiment in the local market.

"People are still in the dark about the medium and long term
prospect of our market," Mashill's Antonio said. (aly)