Rupiah fails to rally, stocks plunge further

Rupiah fails to rally, stocks plunge further

JAKARTA (JP): The rupiah remained weak yesterday as the yen's
slide against the U.S. dollar continued to cast a gloomy shadow
over regional currencies.

Fears of a possible riot ahead of Indonesian Independence Day
on Aug. 17 also encouraged people to hold onto their greenbacks,
dealers said.

The rupiah closed at 13,050/13,100 against the American dollar
yesterday, slightly lower than its close at 12,950 the previous
day.

"The bearish sentiment in the regional market, especially the
fall of Japanese yen, significantly contributed to the fall of
the rupiah," a chief dealer with a local bank said.

The yen broke the 147-point level against the U.S. dollar in
Asian trading yesterday, a mark which sent anxious ripples
through other currencies across the region.

Dealers said worries over a further weakened yen and a
possible devaluation of the yuan had put more pressure on the
rupiah yesterday.

"As a result most investors are scared to stay in the local
market," a dealer said.

Dealers said although state banks were seen selling a small
amount of dollars for the rupiah in the market, it failed to
shore up the rupiah's stand against the U.S. dollar because
regional market bearishness offset its impact.

"Since the amount is limited, it has no significant impact on
the rupiah," one said.

Dealers said the state banks stepped into the market when the
rupiah was quoted at 13,100 and offered to sell the dollar at the
13,050 level.

Currency dealers also attributed the fall of the rupiah to
market fears over possible social unrest ahead of the
commemoration of the country's Independence Day next week despite
assurances by the Armed Forces to ignore the groundless rumors.

"Though this is just rumors, it has scared investors away," a
dealer said, pointing out that market was greatly concerned that
bloody looting similar to May 13 would occur again in coming
days.

Bearish sentiment on the rupiah extended to the stock market
with prices on the Jakarta Stock Exchange (JSX) declining by 3.35
percent, or 14.10 points, to 407.06 yesterday.

Total turnover was about 246.61 million shares changing hands,
valued at Rp 238.87 billion (US$18.37 million).

Stockbrokers said that both domestic and offshore investors
also dumped blue-chip stocks in the local market due to weak
sentiment overseas.

"Those who have placed large selling orders over the past
weeks continue to unload their portfolios," an institutional
broker with Trimegah Securindo Lestari said.

"While those who have not ... prefer to take a wait-and-see
attitude ahead of Aug. 17," the broker said.

Head of research of Vickers Ballas Tamara Noraya Soewarno said
that most investors continued to make massive selloffs due to the
absence any positive incentives in the country's battered market.

"There are no positive leads which can push up the stock
market in the local bourse until Aug. 17."

Brokers and analysts said the main price index would likely
test the 400 point level soon if bearish sentiment in the
regional market continued.

Blue-chip stocks like state telecommunication firm PT Telkom
slid Rp 350 to Rp 3,375 on a total turnover of 2.03 million
shares, satellite operator Indosat shed Rp 900 to Rp 9,975 on
645,500 shares, tin mining firm Tambang Timah fell Rp 75 to Rp
7,925 on 150,500 shares and cigarette maker HM Sampoerna slid Rp
225 to Rp 2,575 on 11,88 million shares. (aly)