Rupiah continues free-fall, touches record low of 4,155

JAKARTA (JP): The rupiah fell deeper yesterday, breaking the 4,100 barrier to touch another historic low, while the stock market managed to make a three-day rally, dealers and brokers said.

Currency dealers said spot rupiah fell to a historic low of 4,155 against the U.S. dollar yesterday afternoon when fire gutted the upper floors of one of Bank Indonesia's new twin towers.

Spot rupiah closed at 4,142 to the greenback, compared with an opening of 4,010/30.

"The rupiah was under attack from the opening. Even though it was defended by Bank Indonesia in the morning, the rupiah showed no sign of strengthening.

"Moreover, when the central bank was absent in the afternoon, the rupiah was pushed down further to touch an all-time low," said one local bank chief dealer.

Dealers said Bank Indonesia was seen intervening simultaneously in both the foreign exchange and money markets, but with a very small amount of dollars.

They said Bank Indonesia stepped into the spot (foreign exchange) market early in the morning to provide some support for the rupiah at the 4,055, 4,070 and 4,100 levels.

In the money market, dealers said Bank Indonesia was seen bidding for overnight money at 17 percent and later at 19 percent to prevent short-end swaps from entering into negative territory.

The central bank was absent from the market in the afternoon when fire gutted the top floors of one of its new twin towers. The rupiah then continued its freefall and touched the all-time low of 4,155.

Bank dealers said the rupiah was weighed down by concerns over President Soeharto's health, fire at the central bank's building and some regional weaknesses.

Minister/State Secretary Moerdiono announced last Friday that Soeharto had canceled a planned trip to Iran after being advised to take 10 days of rest because of fatigue. Moerdiono asserted Soeharto's doctors had said he was otherwise in good health.

Soeharto returned last week from a 12-day trip that took him to Namibia, South Africa, Canada and Saudi Arabia.

Besides concern over Soeharto's health, fire at the central bank's building on Jl. Kebon Sirih yesterday was also responsible for weakening the rupiah as clearing activities were affected.

The fire engulfed the four top floors of the bank's new 25- story A tower, killing 15 people.

The A tower houses the bank supervision department and was only partially in use. The nearby twin B tower is not yet occupied.

Bank Indonesia announced that submission of all clearing documents to the central bank were canceled yesterday. The clearing documents could be submitted to Bank Indonesia today at 11.00 a.m.

All clearing returns, interbank money market transactions, interbank foreign exchange transactions and foreign exchange transactions with individual customers worth more than Rp 1 billion (US$243,900) would be canceled today (Tuesday), Bank Indonesia said.

Dealers said Soeharto's health and the fire seemed to have also prevented the rupiah from recovering along with the ringgit. Instead, the rupiah absorbed weaknesses in the won and the baht.

Despite the weakening rupiah, stock prices on the Jakarta Stock Exchange (JSX) continued to rally. The JSX composite index gained 2.1 percent, closing up 8.835 points at 423.613.

Stockbrokers said the rise was due more to support from state- owned enterprises rather than fundamentals.

Soeharto was quoted by businessman Aburizal Bakrie last month as saying he had instructed state-owned firms to spend 1 percent of their profits to buy shares or mutual funds from the market.

Brokers said state-owned Danareksa Sekuritas and Bahana Sekurities were still seen buying large-cap stocks to prop up the index.

State-run domestic telecommunications firm Telkom gained Rp 175 to close at Rp 3,075, while international telecommunications operator Indosat rose Rp 675 to Rp 9,250.

Cigarette maker Sampoerna closed Rp 100 higher at Rp 5,075, while competitor Gudang Garam fell Rp 325 to Rp 8,675.

Bank International Indonesia rose Rp 50 to Rp 525, state-owned Bank Negara Indonesia stayed unchanged at Rp 600 and Bank Dagang Nasional Indonesia rose Rp 25 to close at Rp 450. (rid)

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