Rupiah extends gains as stocks continue to fall
Rupiah extends gains as stocks continue to fall
JAKARTA (JP): The Indonesian rupiah extended gains yesterday
amid optimism about the country's efforts to clean up its banks,
while local stock prices continued to fall, tracking a regional
weakness.
Currency dealers said that unlike in recent months, the
foreign exchange market was no longer jittery in the face of
rumors or even threats of unrest, such as that posed by the
current Indonesian Democratic Party (PDI) congress in Palu.
"The fate of the rupiah currently rests with the market
principle of supply and demand. The market is bullish on the
rupiah on expectation of more official funds flowing into the
country," a dealer with a local private bank said.
The rupiah rose to 11,000 against the U.S. dollar in morning
trade before closing at 11,175, much stronger than Monday's close
of 11,650.
Dealers said the government move last weekend to suspend the
operations of three sick banks and take over the shareholdings of
four others had gained market support.
In addition, the market was also pleased with the Armed
Forces' move to discharge former president Soeharto's son-in-law
Lt. Gen. Prabowo Subianto to punish him for his role in the
abduction and torture of political activists.
"Those moves prove that the government and the military are
serious in their efforts to regain market confidence," the dealer
said.
However, the local stock market continued to suffer from
regional bearishness, record high banking deposit rates and
arbitrage selling on dual-listed stocks yesterday.
The Jakarta Stock Exchange Composite Index fell 3.402 points
to close at 367.143 with a turnover of 247.25 million shares
worth Rp 310.43 billion.
Edwin Syahruzad, a stock analyst at Pentasena Securities, said
both the short-term and long-term outlooks for the local market
remained gloomy because high interest rates appeared set to
remain in place for a long time.
He said that many local and foreign investors had moved their
funds from the equity market to one-month Bank Indonesia (BI)
promissory notes (SBIs) which offer rates of 70 percent per
annum.
"SBIs have attracted the attention of investors because they
carry no risk," Edwin said.
A broker with Trimegah Securindo Lestari said that trading
activities remained sluggish because foreign investors had not
yet returned to the battered local market in any strength.
In addition, he said they were greatly concerned over
revisions to the government's plan to privatize state
enterprises.
The broker said that although stock prices for some state
companies were relatively cheap, foreign investors were not
interested because they feared the government might backtrack yet
again.
Shares in heavyweight state telephone company PT Telkom slid
Rp 25 to Rp 2,775 with 14.58 million shares traded and shares in
the state international call operator PT Indosat dropped Rp 475
to Rp 8,925 on 460,500 shares traded.
State tin mining company PT Tambang Timah shares fell Rp 250
to Rp 6,025 on 736,500 shares traded, but state cement
manufacturer PT Semen Gresik gained Rp 1,050 to Rp 7,100 on 3.71
million shares traded.
Shares in cigarette giant PT Gudang Garam slid Rp 25 to Rp
8,400 on 841,000 shares traded, while shares in competitor PT HM
Sampoerna rose Rp 50 to Rp 2,425 on 7.9 million shares traded.
(aly/rid)