Rupiah firm, stocks up amid regional weakness

Rupiah firm, stocks up amid regional weakness

JAKARTA (JP): The rupiah was stable yesterday as the local
stock market gained ground amid regional weaknesses, dealers and
brokers said.

Despite weak regional sentiment, rupiah remained stable
yesterday as demand for the currency was quite strong among local
players to meet weekly tax payments due Friday.

Spot rupiah closed at 2,978/2,983, compared with an opening of
2,970/2,980 and a low for the day of 2,989. Tomorrow and today
rupiah closed at 2,970/2,982 and 2,981/2,984, respectively.

"The market was still very quiet and the volume was very thin.
I think most players are already comfortable with their current
position," said one local bank chief dealer.

Share prices on the Jakarta Stock Exchange gained 1.3 percent,
with the composite index climbing 6.807 points to close at
531.079.

Unlike the two previous trading days, turnover was quite large
yesterday, totaling 285.442 million shares valued at Rp 560.885
billion (US$188.2 million).

Stockbrokers said rising intraday trading activities by
incidental investors had increased yesterday's trading volume and
gains on some stocks.

They said investors entering the market yesterday did not
really invest but made profits by intraday trading.

Vice president of Mashil Jaya Securities, Tjandra Kartika,
said many long-term investors were still out of the market,
waiting for the market to recover.

"Investors have lost confidence in the stock market... and the
same holds true for other regional markets," Tjandra said.

He said most listed corporations had to revise down their
earning forecast this year in the face of foreign exchange losses
over the past few months.

Another analyst from a joint venture securities firm said some
investors had switched from the equity market to money market as
there were no fresh incentives for investors in the stock market.

Currency dealers said the rupiah would likely stabilize at the
current level of between 2,900 and 3,000 against the U.S. dollar,
as the trading band had been narrowed to five points in the past
two weeks.

One state bank dealer said the rupiah had not weakened
significantly even when the central bank cut its short-term SBI
papers, especially the one-month and three-month SBI from 30
percent and 28 percent to 23 and 21 percent respectively.

"It proves that the rupiah has been stabilizing," he said.

As the rupiah stabilized, he said, Bank Indonesia (the central
bank) continued to ease liquidity.

The central bank did not offer short-term securities (SBPUs)
but offered SBIs through a daily auction of 14-day papers worth
Rp 10 billion, with one-day settlement.

Overnight rupiah eased to 18 percent from between 25 percent
and 28 percent. Overnight swap was at 2.5/3.0 and tom/next at
0.9/1.0 points.

Dealers said swap rates were steady, with some focus on one-
month swaps. One-week swap was at 6.5/7.5, two-week at 13/15,
one-month at 34/45, two at 71/78, three at 95/110, six at 200/215
and one-year at 365/385 points. (aly/rid)