Rupiah falls to Rp 6,200, stocks stable

JAKARTA (JP): The rupiah broke the psychologically 6,000 level against the U.S. dollar Wednesday and hit an all-time low of 6,200 as corporate borrowers snapped up greenback to pay their maturing offshore debts.

Currency dealers said the Indonesian currency strengthened in afternoon trading following the central bank's intervention.

"The rupiah recouped at closing after Bank Indonesia stepped in and sold a limited amount of dollars," a chief dealer with a local private bank said.

However, he said the intervention was too late as it came after the rupiah had hit 6,200.

Most dealers attributed the weakening rupiah to the high demand for dollars from local corporate borrowers in order to repay their debts.

"The dollar liquidity dried up Wednesday while the demand from local corporations and individuals for the dollar remains high, forcing the rupiah to continue weakening," one of the dealers said.

"It is really bad news in the lead up to Christmas."

Dealers said spot rupiah closed at 6,125/6,175 in Jakarta against 5,500/5,700 during the morning trading session.

Dealers said the demand for dollar had been high in the last several weeks in line with the increase in the amount of maturing debts.

Increasing demand for the greenback pushed the rupiah to its previous record low of 5,950 on Dec. 16 but the currency gained a footing at levels between 5,000 and 5,250 per dollar in the following days.

The increase in the dollar's demand, combined with unfavorable news on the Indonesian economy -- such as the downgrading of the Indonesian credit rating -- put more pressure on the rupiah, the dealers said.

Other Asian currencies, including the closely watched South Korean won, were relatively stable in thin pre-Christmas trading, they said.

Despite the rupiah's new low, stock prices on the Jakarta Stock Exchange (JSX) closed relatively stable Wednesday with the Composite Index almost unchanged at 396.53 on a total turnover of 449.13 million shares worth Rp 435.53 billion (US$87.10 million).

Securities analysts said prices of several big capitalized stocks gained ground in moderate trading as fund managers bought the blue chips as window dressing to prop up their year-end financial reports.

"Most fund managers bought up big for window dressing to make their financial statements look good," a broker with Trimegah Securities said.

Many security analysts said that most investors had started their year-end leave and any move in the stock market was artificial.

"The general outlook for stocks remains bleak as long as the rupiah has not stabilized," the head of research for Pentasena Securities, Mohammad Syahrial, said.

Tjandra Kartika of Mashil Jaya Securities shared Syahrial's view saying that the main price in the local market would not surpass the 400-point level before the end of the year because foreign investors' confidence in the local financial and stock market has not been restored.

"The rupiah is the core problem. There is nothing we can do if the rupiah has not bounced back yet. Foreign investors are unlikely to reenter the local market if the confidence crisis continues," he said.

The JSX will be closed on Thursday and Friday for Christmas. (aly)

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