Rupiah fails to breach 11,000 level against dollar

JAKARTA (JP): The rupiah ended slightly lower against the U.S. dollar in quiet dealing yesterday, failing to breach the psychological 11,000 level due to dollar-buying orders by offshore operators, currency dealers said.

The negative sentiment in the rupiah affected the local stock market with stock prices falling 1.6 percent on sustained selling orders on certain large-capitalized stocks.

The rupiah, which opened weaker at 11,200 against the American dollar, closed at 11,200/11,250 yesterday, slightly lower than Wednesday's close of 11,100.

Dealers said that positive sentiment on the International Monetary Fund (IMF)'s plan to immediately release its most-needed bail-out funds for the country, did not last long as the market had discounted it.

"Positive sentiment on the IMF loan was eaten up by massive dollar-buying orders by offshore operators," a chief dealer with a local private bank said.

He said that offshore operators, especially in Singapore, placed whopping dollar-buying orders yesterday to benefit from negative sentiment on the country's social and political fronts.

News reports that angry mobs looted shops for food for a second day in Wonosobo, Central Java, despite local police warnings, drove the rupiah down further.

"News like this has really killed the buoyant sentiment on the rupiah of the past few days," the dealer said.

Dealers said that even though state banks continued to sell dollars for rupiah in a range of between US$30 million to $50 million, this failed to prop up the rupiah against the American dollar.

Dealers said that rupiah's outlook for the rest of the week would remain volatile because of more downward pressure coming from the domestic political situation and regional bearishness.

The Jakarta Stock Exchange (JSX) fell 1.6 percent as persistent selling pressures on blue chip stocks continued to be weighed down by regional bearishness, stock brokers said.

The JSX Composite Index closed 5.98 points lower to a seven- month low of 354.945 on a total turnover of 122 million shares changing hands valued at Rp 223 billion (US$19.23 million).

Losers led gainers 65 to 22, with 75 stocks unchanged and 126 untraded.

Associate director of the state-owned securities house Bahana Securities Andre Cita said that concerns over the inconsistency of the government's privatization plan also upset many foreign investors.

"Investors are worried that the government will not be able to carry out its privatization program for this fiscal year," he said.

In spite of this, state-owned cement producer Semen Gresik ended Rp 675 higher at Rp 7,875 on 5.3 million shares traded on the positive reaction that Mexico's Cemex SA, which is currently holding talks with the government to buy a 14 percent stake in the cement company, would buy more shares on the open market.

Cemex had won the first bidding stage to buy up to 51 percent of Semen Gresik. The government, however, changed its divestment plan for the cement producer due to public opposition.

Shares of international call operator PT Indosat dropped Rp 625 to Rp 7,975 and tin mining firm PT Tambang Timah's shares also shed Rp 225 to Rp 5,775 on 65,000 shares traded.

Brokers also attributed the fall in stock prices to a change of investors' investment pattern from the equity market to the money market to benefit from a higher yield in Bank Indonesia's one-month promissory notes.

"With an interest rate of 70 percent, some investors prefer to put their funds in BI's one-month promissory notes than in the stock market," a broker with Mashill Jaya Securities said. (aly)