Rupiah firm despite political instability

Rupiah firm despite political instability

JAKARTA (JP): The rupiah managed to stay in touch with the
7,000 level against the U.S. dollar on Wednesday, despite the
country's political uncertainty.

Analysts said the rupiah closed slightly lower at 7,500
against the U.S. dollar, with the overall trading outlook
remaining stable.

News of a cut in the U.S. Federal Reserve's interest rate
helped the rupiah strengthen to its intraday high of 7,250, but
profit taking in the afternoon reversed the morning's gains,
analysts said.

"The fate of the rupiah was determined by regional factors,
and especially the U.S. interest rate cut," a chief dealer with a
local private bank said.

Dealers said the U.S. interest rate cut prompted some market
participants to sell dollar holdings either in profit taking or
to cut losses made early on Wednesday.

"Some market participants who bought rupiah at 7,100 later
sold for a profit, while others decided to cut their losses," the
dealer said.

The rupiah, which plunged to 17,000 against the dollar
following May's bloody rioting, has been stronger and more stable
in recent weeks, staying at between Rp 7,000 and Rp 8,000 for at
least four weeks despite rising tension that culminated in
clashes between security forces and anti-government protesters at
the end of last week.

Dealers said that news of a fresh student demonstration in
Jakarta in the afternoon also contributed to the change in
direction witnessed in late trading on Wednesday.

"Demonstrations triggered some short covering in late trading
on Wednesday," another dealer said.

Around 3,000 student protesters took to the main streets of
Jakarta in the late afternoon to mourn those killed in clashes
with security personnel at the Semanggi cloverleaf junction last
Friday.

Share prices on the Jakarta Stock Exchange (JSX) edged higher
on Wednesday, with the main price index rising 3.9 percent (13.76
points) to 369.99 on a total turnover of 490.53 million shares
valued at Rp 389.03 billion (US$51.87 million).

Gainers led losers by 90 to 14, with stocks in 74 companies
remaining unchanged.

Stock analysts said on Wednesday that bullish sentiment around
the region coupled with the interest rate cut by the U.S. Federal
Reserve had revived trading activities on the local bourse.

"Although we have not seen any positive leads at home, the
U.S. interest rate cut lifted local market sentiment," the head
of research at BNI Securities, Adrian Rusmana said. (aly)