Rupiah extends rally, stocks down on profit taking
The Jakarta Post, Jakarta
The rupiah continued to appreciate for a third straight day on Friday after the JW Marriott Hotel bombing.
The local unit closed at Rp 8,567 per U.S. dollar compared to 8,590 the previous day. The rupiah will likely strengthen further next week if no serious incident occurs on the weekend, dealers said.
Dealers said that the positive statement from the government about the economy, and the commitment to continue the economic reform program including assets sales and the privatization program had also heartened investors. The sale of government shares in state enterprises and assets under the Indonesian Bank Restructuring Agency (IBRA) to foreign investors should increase the inflow of hard currencies, which in turn would give a boost to the local currency.
The Marriott bomb blast, which killed 10 people, was not as severe as the Bali bombing incident, which killed more than 200 people mostly foreign tourists.
Some analysts have also said that the local financial market had been able to recover quickly from the Marriott blast partly because the market was now more used to such incidents.
"The increasing stability of macroeconomic indicators has also created a certain confidence in the economy," said one dealer.
Meanwhile, shares fell on Friday as investors took profit in blue chips ahead of the weekend, which traders said was a normal phenomenon.
They also said that investors were still monitoring how the government would resolve the terrorist problem here and the investigation process into the Marriott blast.
Any positive progress in the investigation should push the stock index higher.
The Jakarta stock composite index slightly declined by 0.6 percent at 505.36 on Friday, but was still above the pre-blast closing level of 503.94.
The main index rebounded 4.1 percent in the previous two trading days after falling 3.1 percent on Tuesday, the day when the Marriott blast happened. But dealers said that the two-day rally was too quick particularly at a time when shares were actually in a declining trend before the bomb blast occurred.
Gainers led decliners 89 to 41, with 69 stocks unchanged.
Volume was 1.3 billion shares valued at Rp 580 billion (US$101.19 million).
Shares in market bellwether telecommunications firm PT Telkom dropped 4 percent to Rp 4,250 on profit-taking after gaining 7.2 percent in the past two days.
Profit-taking also hit shares in cigarettemaker Hanjaya Mandala Sampoerna, and carmaker PT Astra International.
Meanwhile, local retail investors continued to purchase cheap second-line shares like cocoa producer PT Davomas Abadi and forestry firm PT Cahaya Kalbar whose shares increased by 32 percent to Rp 245 and by 9.1 percent to Rp 240 respectively.