Rupiah gains, stocks lose ground
Rupiah gains, stocks lose ground
JAKARTA (JP): The Indonesian financial markets ended the
week's trading mixed, with the rupiah continuing to make headway
but the stock market losing steam.
Over the week, the rupiah gained 5.8 percent against the U.S.
dollar, but local stock prices lost 3.9 percent to fall to their
lowest level since 1993.
Currency dealers said the rupiah's charge to close the week
trading at 10,850 against the dollar from the previous week's
close of 11,200 was on the back of persistent dollar sales by
state banks.
Friday's close was little changed from Thursday's close of
10,900.
State banks have led the rupiah's rise from below 13,000 in
early August to its current level. Dealers believe state banks
sold the dollar on behalf of the central bank, Bank Indonesia.
"We expect the rupiah will try to break the 10,500 resistance
level next week because state banks will probably continue to
sell the central bank's dollars for rupiah," a dealer with a
private bank said.
In addition, the rupiah has been kept under control by the
high interest rate policy which is tempting investors to hold on
to the currency.
Rupiah trading Friday was especially thin because most
operators were busy settling their ringgit positions following
Malaysia's move to control trading of its currency, dealers said.
Banks have been given until Thursday to settle their ringgit
obligations, and this is expected to leave rupiah trading in
doldrums next week, they said.
Despite the rupiah's relative strength, stock prices on the
Jakarta Stock Exchange (JSX) continued to slump over the week.
The Jakarta market indicator, the JSX Composite Index, closed
the week at 325.55 points, 3.9 percent lower from the previous
week's close of 339.02.
The index was 2.8 percent down on the previous day.
Friday's trading volume totaled 451.2 million shares changing
hands valued at Rp 310 billion. Losers outnumbered gainers by 77
to 10, with 72 shares unchanged.
Profit taking, the regional bearishness after a drop on Wall
Street Thursday and fears that Indonesia may follow Malaysia's
lead by imposing capital account restrictions caused the fall in
the local market, stockbrokers and analysts said.
Dealers said fears that foreign creditors may begin bankruptcy
proceedings against some second-line listed companies because of
their inability to pay their huge loans also spurred investors to
sell their shares.
State-owned Bahana Securities' associate director and head of
equity sales, Andre Cita, said what was happening in Indonesia
was a combination of domestic malaise and global weaknesses.
He said Indonesia's equity market would not improve unless the
government cut interest rates to normal levels and the global
market rebounded.
"I think we have a period of a few weeks that is going to be
very difficult. I'm hopeful that by the time we get into the last
quarter, things will be a little clearer and we'll have something
better to look forward to," Cita said.
Stockbrokers said investors sold blue-chip stocks across the
board yesterday, triggering a market sell-off.
Market leader PT Telekomunikasi Indonesia (Telkom), which
accounts for 17 percent of market capitalization, fell Rp 50 to
Rp 2,100 on two million shares traded and tin producer PT Tambang
Timah lost Rp 325 to end at Rp 4,400 on 130,500 shares traded.
Salim Group's food-arm, PT Indofood Sukses Makmur, was also
down, Rp 100 at Rp 1,925 on 47.55 million shares traded after
Japan's Nissin Food Products Co said it was not interested in
buying a stake in the local food giant. (rid)