Rupiah falls to 8,285 against U.S. dollar
Rupiah falls to 8,285 against U.S. dollar
JAKARTA (JP): The rupiah continued its decline against the
U.S. dollar on Tuesday, sliding to 8,285 at the end of the
trading -- from 8,105 the previous day -- as fear intensified
over the East Timor issue.
However, share prices in the local stock market advanced 0.9
percent on the buying of telecommunications and cigarettes shares
which bucked the bearish trend of most others, analysts said.
Currency and securities analysts said that the East Timor
issue was still the main influencing factor behind the bearish
financial market, further adding to negative sentiments resulting
from the Bank Bali scandal and other social turmoil in several
parts of the country.
Adrian Rusmana from PT BNI Securities acknowledged the main
factor behind the rupiah's sharp fall was investors' fear that
Indonesia's poor handling of the bloody conflicts in the riot-
torn province could lead to a suspension of the IMF bailout fund.
"But it is not the only reason. Concerns that the interest
rate will further decline also caused the rupiah's fall," he
added.
Indonesia's consumer price index, which measures inflation,
declined for a sixth consecutive month in August by 0.93 percent
from its level in July.
Theoretically, negative inflation would prompt the central
bank to reduce its interest rates.
He said a further drop in the deposit rate from the average 14
percent at present would certainly make an investment in dollars
much more attractive.
"This is certainly bad news for the Indonesian currency," he
added.
The government, through state Bank Mandiri, was seen
intervening the market to sell dollars below Rp 8,200 in an
attempt to arrest the greenback's rise, another analyst said.
Unlike the rupiah, share prices on the Jakarta Stock Exchange
(JSX) rose 0.9 percent on Tuesday, with the benchmark price gauge
rising 4.92 points to 545.35 points.
JSX trading volume on Tuesday was just 228 million shares
worth Rp 470 billion.
Stock brokers said that fears the rupiah would weaken further
amid the turmoil in East Timor weighed down market sentiment.
But in late trading, he said, telecommunications and cigarette
shares were active, which then brought up the index.
"Telkom, the state-owned telecommunications company, and
cigarette shares were seen active amid the other shares that
moved so slowly," he said.
Some stock brokers said the government might have intervened
the market by buying blue chips, especially those of state-owned
Telkom and Indosat, to boost the price index.
Shares of PT Telkom closed up 2.8 percent or Rp 75 to Rp
2,725. State-owned international telecommunications operator
Indosat was up 1.5 percent or Rp 175 at Rp 12,000. (udi)