Rupiah falls to 8,200 level to dollar, stock index rises

JAKARTA (JP): On the last trading day of a helter-skelter year, the rupiah sank to the 8,200 level against the U.S. dollar in moderate dealing on Wednesday.

Stock prices rose slightly, with the main price index closing at 398.03 points.

Currency dealers said the rupiah dipped against the greenback due to unexpectedly high fresh dollar demand by local commercial banks.

"The rupiah failed to close firmer as most local commercial banks were on the buying side," a chief dealer with a joint venture bank said.

Bank Indonesia Governor Sjahril Sabirin characterized the increase in dollar demand at yearend as a normal phenomenon.

"It is a common occurrence. There is always a rise in dollar demand at yearend which keeps the rupiah weak," he said on Wednesday.

He expressed optimism the beleaguered rupiah would strengthen against the dollar at the beginning of next year.

"I think the rupiah should appreciate against the dollar because there are factors to support such a rising trend."

He said the central bank would continue to step into the market with limited dollar selling for the rupiah.

Although the central bank adopted the same stance on Wednesday, it failed to prop up the rupiah at the close because the volume of its dollar selling was smaller than dollar demand.

Dealers said the central bank's limited intervention managed to bring the rupiah to 7,900 level after the lunch break before weakening again in the afternoon.

The rupiah eventually closed at 8,075 at the close on Wednesday, 0.9 percent lower compared to 8,000 the previous day.

The rupiah has lost 46 percent in value against the American dollar compared to its level at 5,500 from yearend in 1997.

Share prices on the Jakarta Stock Exchange (JSX) closed slightly firmer, with the benchmark price index rising 1.30 points.

A total of 178.87 million shares, valued at Rp 178.81 billion, changed hands.

Gainers outnumbered losers by 58 to 53, with 87 stocks unchanged.

Wednesday's close represented a 0.9 percent drop in the JSX Composite Price Index from the 401.71 recorded on the first trading day of this year.

Securities analysts and brokers said that the market was extremely unstable this year, with the main price index hitting a year low of 255.46 points on Sept. 21 and a high of 570.65 points on Feb. 2.

"The market was very volatile as the country was hit by so many social and political events," said Imelda Kwan, an institutional sales broker with Trimegah Securindolestari.

Market capitalization, however, rose 9.9 percent to Rp 176 trillion by the end of this year, compared to Rp 160 trillion recorded last year.

But stockbrokers said that trading activities on Wednesday remained dull as many securities firms were already closed and investors were on their yearend holidays.

"But late buying of certain shares kept the index in positive territory although it was still below the key 400 level," Trimegah's Imelda said.

Head of research of BNI Securities Adrian Rusmana said many foreign fund managers were deterred from entering the local battered bourse due to huge unresolved economic and political uncertainties.

"They remained concerned about the country's market. So they will be watching closely on the development of the country's political and economic situation next year." (aly)