Rupiah falls again but stock prices gain ground
Rupiah falls again but stock prices gain ground
JAKARTA (JP): The rupiah remained weak against the U.S. dollar
yesterday, but Jakarta share prices increased slightly in a
technical rebound, analysts said.
Foreign exchange dealers said the further weakening of the
rupiah was triggered by falls in the Singapore dollar and
Malaysian ringgit.
They said spot rupiah, which opened at 2,610/2,620 against the
dollar, was knocked down to 2,655 by midday before it stabilized
in the afternoon and closed at 2,640/2,643.
Share prices on the Jakarta Stock Exchange rose 0.7 percent,
with composite index closing 4.77 points firmer to 662.94
yesterday.
Total turnover was 296.01 million shares worth Rp 503.85
billion (US$194.53 million) changing hand on the regular market
yesterday.
Securities analysts said yesterday's rise in stock prices was
just a technical bounce after a sharp plunge in the past few
days.
"I think it is just a technical rebound after the market saw a
sharp plunge since early August," an analyst said.
Trimegah Securities' head of research, David Chang, said a
wave to pick up big-capitalized stocks, including PT Telkom,
helped activate market sentiment yesterday.
"Investors are starting to pick up good quality stocks which
are already cheap in the market," Chang said.
He said share prices on the Jakarta Stock Exchange were the
cheapest in the region.
But he warned that regional currency volatility and the
weakening rupiah would remain a big concern for investors.
"I think most investors are still worried about the prospect
of rupiah and other regional currencies," Chang said.
Foreign investors would not enter the market until they saw a
clear direction for the rupiah, a dealer said.
"While the rupiah is not stabilized, the stock market will not
change much in the coming months," he said.
One foreign exchange bank's chief dealer said the weakening of
the rupiah was due to a drastic drop in the Singapore dollar,
which fell through the psychological 1.50 to the U.S. dollar
level to hit a new three-year low of 1.5085.
This followed comments by a Monetary Authority of Singapore
official that the Singapore dollar's level was appropriate to
what was happening in the market.
"I hope no one in Indonesia's monetary authority will comment
on the rupiah this time because it will just worsen the
situation," the chief dealer said.
Dealers said Bank Indonesia, the central bank, was not seen
intervening in the market although the rupiah fell off the range
the central bank had said it was comfortable with, between 2,550
and 2,610.
A dealer with another foreign exchange bank said the rupiah
would continue to weaken because many local investors exposed to
dollar debts had an open position on the dollar.
"They want to hedge their position at 2,550 level. But I would
say it is impossible to reach that level given the current
situation," he said.
The central bank kept its rates of bilateral central bank
certificates (SBI) unchanged and continued to be absent from the
short-term securities (SBPUs) market.
Dealers said artificially high central bank short-term rates
were likely to continue as the foreign exchange market remained
volatile.
The central bank kept its intervention band at 2,378/2,682 but
raised the conversion band to 2,616/2,664 yesterday from
2,588/2,636 Monday. (aly/rid)