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)