Rupiah falls on reports of unrest and massive rally
Rupiah falls on reports of unrest and massive rally
JAKARTA (JP): The rupiah nose-dived on Tuesday on reports of
unrest and student demonstrators demanding President B.J. Habibie
resign.
The volatile currency, which opened weaker at 11,500 against
the U.S. dollar, closed at 12,100/12,250 in the Jakarta spot
market Tuesday, 11.5 percent lower than Monday's close at 10,850.
Dealers attributed the rupiah's drastic fall, after gathering
momentum against the American dollar over the past few weeks, to
growing fears of unrest in several towns outside Jakarta
escalating to major population centers.
They said the demonstration staged by students at the House of
Representatives building on Monday worsened market sentiment.
The security officers reportedly used tear gas early on
Tuesday to disperse a gathering of hundreds of university
students protesting at the compound.
"Investors were scared to see the student demonstration, the
largest rally since May, after several weeks of calm," a chief
dealer with a local private bank said.
The students demanded that Habibie step down from the
presidency as he had failed to lead the country out of its dire
economic state.
Newspapers also reported on Tuesday social unrest in Central
Java. Angry mobs, according to the reports, burned and damaged at
least 20 shops owned by ethnic Chinese in Kebumen on Monday.
The dealers said the reports of rioting had incited foreign
investors especially from Singapore, to cash in their rupiah for
dollars.
"Bulk dollar-buying orders from Singapore ate up the dollar-
selling by state banks at home," the dealer said, pointing out
that state banks, which sold US$20 million in the market, failed
to improve the rupiah's stand against the greenback.
Stock market
Bearish sentiment on the rupiah extended to the stock market
with stock prices on the Jakarta Stock Exchange (JSX) falling 1.6
percent Tuesday on the back of market fears of a tense political
situation at home and profit-taking in some stocks that had
rallied in the previous days.
"But the general tone is that most investors fear another
biggest student rally in the coming days," the head of
institutional sales at Mashill Jaya Securities, Antonio Yongnata,
said.
The JSX Composite index fell 5.39 points to 330.41 on a total
turnover of 190.52 million shares valued at Rp 280.28 billion
(US$25.48 million).
Losers outnumbered gainers 45 to 27 with 78 stocks unchanged.
Antonio said that the country's rattled financial market,
which is currently struggling to lure foreign fund managers to
it, was predicted to decline further because of the political
uncertainty at home.
Stockbrokers said that most foreign investors, who had long
moved to the sidelines of the local hammered market, continued to
shun the bourse.
"The sentiment is so bad that our battered market is going
down into another gloomy situation," an analyst with Trimegah
Securindo Lestari said.
Brokers said it was only the rise of international call
operator PT Indosat, which rose Rp 425 to Rp 8,000 on 93,500
shares, that prevented the main index from falling further.
Trading on the local market was marked by the suspension of
trading in poultry producer PT Cipendawa Farm Enterprises and
Bank Arya Panduarta after it emerged the former had closed its
operations on August 1 and the latter experienced a significant
increase in share price.
Cipendawa, which is 36 percent owned by Probosutedjo, the half
brother of former president Soeharto, was allegedly in massive
financial difficulties due to the crisis, stock analysts said.
(aly)