Rupiah falls against greenback as stock prices inch down

JAKARTA (JP): The rupiah failed to advance its leeway against the U.S. dollar on Thursday, closing nearly 3 percent lower to Rp 8,700 to the dollar as stock prices inched down 0.3 percent.

Currency dealers said the rupiah, which managed to shoot up to 8,450 to the dollar on Wednesday, suffered another setback after offshore operators sold the currency for dollars.

They noted that the general fall in the yen and other regional currencies against the American dollar encouraged dollar buying across the region, including in Indonesia.

Chris V Koemolontang, a chief dealer with a joint venture bank in Jakarta, added that offshore operators tried again to build a long dollar position amid the worsening situation at home.

"Basically there was nothing special, except that worries over security at home negatively affected the rupiah," Chris said.

Chris and other dealers said state banks were again seen selling dollars on the market, but it failed to lift up the local currency.

"Dollar selling by state banks was small and it was eaten up by the large dollar demand by offshore players," Chris added.

Dealers said the rupiah opened at 8,450/8,550 and continued to wane against the American dollar. It closed the day at 8,700.

They said the rupiah's fate would remain uncertain in the medium and long-term period given the fact that the social and political situation remained unstable.

Dealers and financial analysts predicted that the outlook of the rupiah would remain in the range of 8,500 and 9,000 on Friday.

Like the rupiah, share prices on the Jakarta Stock Exchange (JSX) slid 0.3 percent, with the JSX Composite Index closing 1.53 points lower at 409.02.

Trading turnover totaled 289 million shares valued at Rp 353.74 billion.

Decliners outdistanced advancers 48 to 23, with 84 stocks remaining unchanged.

Stockbrokers and analysts attributed the slight drop in share prices to profit taking on certain blue chip stocks that rallied heavily in the past three days.

"The decline in our stock market today was mainly driven by profit taking on certain stocks," Vonny Juwono, an institutional sales broker with Trimegah Securindolestari, said.

Most large-cap stocks which gained over the last three days fell on Thursday, with market leader, state-owned telecommunications firm PT Telkom, sliding Rp 25 to close at Rp 3,025 on 13.22 shares traded.

Vonny said foreign investors were not tempted to put funds in the local market yet.

"Even if there are some foreign investors doing trading here, they do it for short-term speculative reasons only," she said, pointing out that several foreign brokerage firms such as GK GOH Ometraco, Vickers Ballas Tamara and Jardine Fleming Nusantara were on the selling side.

Securities analysts said that compared to other neighboring countries hit by financial turmoil, Indonesia's investment climate had not improved significantly due to persistent worries over the potential for escalating social and political unrest.

"Market sentiment had not improved, but it deteriorated even further at news on increasing social violence in the country," an analyst with local securities firm said.

He said market sentiment would not improve in the short term, with stock prices expected to fall further ahead of the weekend.

"Moreover, investors do not want to hold onto their portfolios during weekend," he said. (aly)