Rupiah down to 5,500, stock mart index up to 401.71

JAKARTA (JP): The value of the rupiah was down 56.7 percent this year, closing at 5,500 against the U.S. dollar yesterday, while local stock prices dropped 37.3 percent with the main price index closing at 401.71 points.

Currency dealers said the rupiah failed to close firm against the dollar on the last trading day of 1997 yesterday because demand for dollars by local companies remained high.

They said persistent intervention by Bank Indonesia, the central bank, failed to shore up the rupiah at the close.

Dealers said the spot rupiah ended lower at 5,500/5,600, compared to an opening of 5,300/5,500 in the morning.

The rupiah opened the year of 1997 at 2,363 against the dollar. At that time, the rupiah was still guarded by Bank Indonesia's intervention band. Following persistent speculative attacks, the government floated the rupiah on Aug. 14.

Dealers said the central bank stepped in the market when the rupiah hit 5,450 and 5,350 yesterday to prevent the rupiah from declining further, but persistent corporate demand continued to place pressure on the rupiah.

Dealers said the central bank continued to intervene when the rupiah was at 5,250 and 5,150.

"The intervention brought the rupiah up to as high as 4,980 just after lunch break before it weakened again in the afternoon," one chief dealer with a local private bank said.

"The bulk demand by local companies to buy dollars failed to keep the rupiah under 5,000," he said.

The rupiah continued to fall further in London to as low as 5,550/5,600 yesterday.

Most dealers said trading remained thin and rupiah liquidity dried up prompting a volatile market.

Stock prices on the Jakarta Stock Exchange (JSX) ended marginally higher yesterday with the main price index increasing 3.69 points to close at 401.71.

Over 715.98 million shares changed hands on the regular market valued at Rp 545.19 billion (US$109.03 million).

Yesterday's close represented a 37.3 percent drop in the JSX composite index from 638.10 points recorded on the first trading day of 1997.

The index reached its peak on July 8, when it hit 740.83 points. It dipped to its lowest point of 339.52 on Dec. 15.

Market capitalization dropped about 27 percent in rupiah terms, from Rp 215.03 trillion at the end of 1996 to Rp 157.87 trillion on Dec. 24. In dollar terms, market capitalization dropped 68 percent from $90.23 billion to $28.70 billion.

Stock brokers said trading fluctuated sharply yesterday, with the main price index down 3.4 points before passing 400 points.

"Initially, I did not expect the index to pass 400 points. But to my surprise, people entered the market hastily on this last trading day of the year," a broker with Trimegah Securities said.

Most blue chips ended higher yesterday with PT Telkom up Rp 25 to Rp 2,925, Indosat up Rp 300 to Rp 10,200, Sampoerna up Rp 75 to Rp 4,150 and Gudang Garam up Rp 150 to Rp 8,400.

Both currency and stock markets will be closed today and tomorrow for the New Year's holiday and will reopen Friday. (aly/rid)