Rupiah elongated gains but stocks slide further
Rupiah elongated gains but stocks slide further
JAKARTA (JP): The rupiah defied regional bearish sentiments,
strengthening to 12,700 against the U.S. dollar, while local
stock prices succumbed to the mounting pressure.
Currency dealers said the rupiah was pushed higher from state-
owned bank transactions and the talk of possible dollar sales by
Bank Indonesia, the central bank.
"Although there was no other positive sentiment in the market,
limited dollar selling by state banks helped improve views on the
rupiah," a chief dealer with a local private bank said.
Dealers said the rupiah opened at 12,750 against the U.S.
dollar in the Jakarta spot market but fell to a day low of 13,000
before rebounding back to 12,650/12,750 at yesterday's close.
The rupiah closed Wednesday at 12,800.
Currency dealers warned, however, that a mild intervention by
the central bank through dollar sell-offs like in previous days
would not bring a positive outcome over the long term.
"Intervention like this will only help the rupiah for a
temporary period ... but not over the long term," a dealer with
another private bank said.
Dealers said the fate of the rupiah would still be determined
by regional currencies, especially the Japanese yen and the
Chinese yuan.
Concern over a possible devaluation of the Chinese yuan sent
the rupiah to its low of 13,000 yesterday, they said.
Dealers said the rupiah's gains against the American dollar
over the past few days would likely continue in the coming days.
"We expect the rupiah to break the 12,500 level tomorrow
(today) and test the 12,000 barrier soon," a dealer with a joint-
venture bank said.
"But a continuation of this trend would be doubtful if there
is a major outbreak of unrest ahead of independence day," he
warned.
Dealers said the market was speculating that a massive rally
ahead of independence day on August 17 would occur, which would
create pressure on the rupiah.
Unlike the rupiah, stock prices on the Jakarta Stock Exchange
(JSX) continued to decline for a sixth consecutive day yesterday,
led by the heavyweight state-owned telecommunications firm PT
Telkom.
The JSX composite index fell 1.79 percent, or 7.95 points, to
433.83 yesterday on a total turnover of 143.53 million shares
valued at Rp 198.76 billion (US$15.65 million).
Stockbrokers said foreign institutional investors, which
placed large buying orders on large-cap stocks over the previous
days, continued to unload their stocks as the rupiah
strengthened.
"As usual, the movement of the index is always determined by
these large-cap stocks, in particular Telkom," Karman
Pramurahardjo of Harita Kencana Securities said.
Telkom, which accounted for some 17 percent of market
capitalization, fell Rp 200 to close at Rp 3,625 with 6.87
million shares traded.
Other large-cap stocks also continued to decline, with state
international call operator PT Indosat losing Rp 1,100 to Rp
12,000 on 328,500 shares.
State tin miner PT Tambang Timah slid Rp 50 to Rp 7,950 on
530,500 shares, while pulp and paper producer PT Tjiwi Kimia shed
Rp 25 to Rp 2,435 on 2.78 million shares.
Cigarettemaker PT HM Sampoerna gained Rp 25 to Rp 3,050 on 4.8
million shares, while competitor PT Gudang Garam lost Rp 25 to Rp
8,075 on 684,500 shares.
"I predict the stock market will go down further tomorrow
(today) in tandem with the bearish regional market," a broker
with a local securities firm said. (aly)