Rupiah continues bullish performance

JAKARTA (JP): The rupiah maintained its bullish performance for a third consecutive day on Thursday although some feared that political pressure against President Abdurrahman Wahid would intensify in the coming days following his refusal to answer the request from the House of Representatives to explain the firing of two ministers.

Currency dealers said the Indonesian currency ended the day 1.5 percent higher at 8,890 against the U.S. dollar as compared to 9,018 in late trading on Wednesday.

The rupiah rose to a range of between Rp 8,870 and 8,890 in the morning trade as the market gave a positive reaction to the presence of President Abdurrahman, more popularly called Gus Dur, at the meeting.

But unfortunately Gus Dur's presence at the meeting was not aimed at answering questions but to defy the legislature's right of interpellation. This caused the rupiah to dive as low as 9,210 around lunch time as some feared that the President's refusal would further intensify current conflicts.

Profit-taking in late trading, however, helped the rupiah to recover to the Rp 9,000 level.

A dealer at a Singaporean joint venture bank said that the strengthening of the rupiah was due to Bank Indonesia's intervention.

"It is understandable that they have to defend the rupiah after it had been continuously rebounding for a few days prior to Gus Dur's visit to the House of Representatives," he said.

He supported the central bank's intervention as such a move could further encourage players who had earlier bought dollars on bad news to square their long dollar positions.

"The central bank has to try to bring back the rupiah to its late June 8,750 level so as to trigger more and more participants to cut losses on their recent dollar holdings," he said.

He added the 8,750 level was critical for the rupiah, as this level was the starting point for the rupiah's roller coaster ride this time around immediately following a bomb explosion at the Attorney General's office.

He predicted the rupiah would be traded in a wide range of between 8,750 and 9,150 on Friday.

Unlike the rupiah, the Jakarta Stock Exchange (JSX) Composite Index ended one-third of a point down at 513.39 on Thursday.

Erwin S. Widjojo of Indovest Securities said the equity market, however, had a good start early in the morning session on Thursday, briefly booking some positive gains.

But the Composite Index then shifted direction late morning and took a rather quick dive.(udi)