Rupiah falls to another new low as shares gain footing
Rupiah falls to another new low as shares gain footing
JAKARTA (JP): The rupiah fell yesterday to another new low
against the U.S. dollar but local stock prices gained footing on
the increase in prices of blue chip shares.
The rupiah sank to a new historic low of 3,290 against the
dollar in morning trade before recovering to close at 3,269
against the opening of 3,210, foreign exchange dealers said.
Local dealers said the rupiah's fall was triggered by the
increase in demand for the American greenback.
"Local companies are seeking the dollar to repay their foreign
short-term debts. Others buy the dollar to cover their unhedged
positions," one dealer said.
A sharp fall in regional currencies, such as the Malaysian
ringgit, also partly contributed to a further fall in the rupiah.
"I think what's happened in the last few days was that there
was a high demand for dollar by some corporate companies to cover
their foreign exchange exposures," Christopher Nailer, Economists
Intelligence Unit's regional economist said on the sidelines of a
seminar organized by The Castle Group yesterday.
Francis Y. Shea, an advisor to Bank Danamon agreed, saying the
weakening rupiah in the last few days was caused by the
increasing demand for U.S. dollar by some Indonesian corporations
to refinance their short-term dollar debts.
"Foreign fund managers in Singapore and Hong Kong know this
situation pretty well and this pushed down the rupiah to a new
historic low," he said.
"That's what happened with rupiah over the past few days," he
said.
A local chief dealer said that many local companies entered
the market and bought a significant amount of dollars from
operators based in Singapore and Hong Kong.
"But the total volume was considerably thin with a value of no
more than four and five million dollars," the dealer said.
A dealer at Bank Bira said yesterday that rupiah was
relatively stable in the afternoon due to market talk that the
central bank checked market prices, encouraging further dollar
buying.
"The central bank checked rupiah-dollar trading activities
yesterday but made no immediate intervention," the dealer said.
He said high corporate dollar demand was reflected by
expensive overnight dollar rates which rose to a high of 25
percent yesterday.
The rupiah's fall yesterday, however, did not affect stock
market share prices.
The Jakarta Stock Exchange (JSX) composite index ended
slightly higher up 0.45 points to 546.68 yesterday, with 234.94
million shares changing hands on the regular market valued at Rp
360.07 billion (US$120.02 million).
Securities dealers said the slight increase in the price gauge
was mainly due to an increase in several big capitalized stocks.
"People are still cautious with continuing uncertainties in
the currency market," Pentasena Securities' head of research
Mohammad Syharial said yesterday.
He said most investors were in a "wait and see" mode to watch
the direction of the rupiah in the long-term.
Even monetary officials have no idea at what level the
plunging rupiah will bottom out.
Minister/State Secretary Moerdiono said Monday that nobody
knew when the rupiah would settle.
Moerdiono, a member of a monetary team dealing with the
currency crisis, said the government would continue to take
efforts to stabilize the rupiah.
"The direction of the rupiah is still the dominant factor in
trading activities in the stock market," one analyst said.
Most blue chip stocks gained yesterday with telecommunications
company PT Telkom rising Rp 25 to Rp 3,625, international
telecommunications company Indosat gaining by Rp 225 to Rp 8,325
and tin mining company Tambang Timah rising Rp 200 to Rp 4,825.
Cigarette maker Gudang Garam gained Rp 200 to Rp 9,500 while its
competitor HM Sampoerna was unchanged at Rp 6,750. (aly)
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