Rupiah continues to rally as stocks drop off again

JAKARTA (JP): The rupiah continued to rally yesterday while the stock market slumped again after Thursday's increase amid regional bearishness.

Currency dealers said the rupiah strengthened to 12,900 against the U.S. dollar in moderate trading yesterday on the back of persistent dollar selling by state banks.

They said some state banks, which were seen intervening in the market over the past few days, stepped into the market again yesterday to lend support for the rupiah.

"Persistent dollar selling by state banks has kept the rupiah sheltered amid regional weaknesses," a chief dealer with a local private bank said.

"Since the amount of dollars sold by the state banks was small, it could not boost the rupiah to the 12,500 level."

The rupiah closed higher at 12,900 against the American dollar in the Jakarta spot market, slightly firmer than its Wednesday close at 12,950.

Dealers said the outlook for the rupiah remained bleak due to lingering worries over the country's political situation ahead of the commemoration of the country's Independence Day on Aug. 17.

The government and the military, however, have assured the public that they will ensure security and order in Jakarta and other cities.

"Despite assurances by the Armed Forces, people continue to remain worried over possible deadly riots in the days ahead," a dealer with another private bank said.

Positive sentiment in the rupiah, however, did not impress investors on the Jakarta Stock Exchange (JSX), stockbrokers said.

They said share prices on the exchange dropped 1.4 percent due to massive sell-offs by both domestic and foreign investors of blue-chip stocks.

The JSX Composite Index fell 5.09 points to close at 402.94 on a total turnover of 249.16 million shares valued at Rp 283.66 billion (US$21.98 million) changing hands.

Stockbrokers said that regionwide bearish sentiment put more pressure on stock prices in the local bourse.

"The fall in the regional markets weighed down the sentiment in the local bourse," state-owned Bahana Securities' associate director Andre Cita said.

Brokers said that the absence of positive news in the local market coupled with expected poor results of most companies in the first semester this year forced most investors to stay away from the country's hammered market.

"With no fresh leads coming into the market, investors continue to dump their stocks," a broker said.

Bahana's Cita also said that "wildly groundless rumors of a possible outbreak of social unrest" ahead of Aug. 17 would send the stock market down further today.

"Despite assurance by the government, I suspect the market will continue to decline through the weekend and will recover slightly after August 17," he said.

Most large-cap stocks fell yesterday, except heavyweight state-owned domestic telecommunications firm PT Telkom which gained Rp 50 to close at Rp 3,400 on 2.1 million shares traded.

Dual-listed Telkom accounts for 17 percent of the local bourse's market capitalization.

State-owned international call operator PT Indosat slid Rp 125 to Rp 10,025 on 214,000 shares changing hands, pulp and paper producer PT Tjiwi Kimia shed Rp 50 to Rp 2,075 on 7.81 million shares, instant noodle maker PT Indofood Sukses Makmur fell Rp 75 to Rp 2,025 on 49.76 million shares.

Cigarettemaker PT HM Sampoerna shed Rp 100 to Rp 2,525 on 10.14 million shares traded, while its competitor Gudang Garam fell Rp 225 to Rp 7,800 on 250,000 shares. (aly)