Rupiah gains strength as Habibie's prospects dim
Rupiah gains strength as Habibie's prospects dim
JAKARTA (JP): The rupiah increased slightly against the U.S.
dollar in thin trading on Friday due to lessening concern that
B.J. Habibie would remain president.
Analysts said that growing speculation that the People's
Consultative Assembly (MPR) would reject Habibie's accountability
speech helped prevent the rupiah from falling further.
"The rejection of Habibie's accountability speech will have no
political consequences for the President. But it will certainly
lessen his chance to be elected," a noted analyst said.
The rupiah, after trading in a range of 7,950 and 8,200 to
the U.S. dollar, finally closed at 8,050 on Friday, slightly
higher than 8,150 on Thursday.
Currency dealers said trading was generally thin as most money
market players took a wait-and-see attitude.
"Most investors took to the sidelines of the market until the
new president is elected next week," one dealer said.
Bank Indonesia Governor Sjahril Sabirin said he believed the
rupiah should strengthen to between Rp 6,000 and Rp 7,000 to the
dollar after next week's presidential election, even if Habibie
beats the odds and is elected.
He said the rupiah would return to a "realistic level" after
the date because the election of a new president would bring
stability, whichever candidate ultimately takes office.
Many analysts in Jakarta take a negative view of the possible
election of Habibie to the presidency, in particular because of a
rising tide of street protests against his government.
Thousands of students took to the streets on Friday to demand
MPR members not to reelect Habibie. Some of the protesters set
passing vehicles in the Central Business District on fire while
others stopped cars in search of military and police personnel.
Shares in the Jakarta Stock Exchange (JSX) also traded in
very thin volume and slow pace as most investors went on the
sidelines to await the election of the new president on
Wednesday.
Hovering within negative territory almost the whole day, the
JSX finally closed about one-fifth point higher following highly
suspected government market intervention and the last-minute
speculative local buying.
The local exchange index closed almost unchanged to end the
week at 567.91 points, with 287 million shares changing hands at
a total value of Rp 294 billion.
The index lost 20.3 points or 3.4 percent during the week.
"The public's negative reaction and the content of the speech
itself have sent the market to a noticeable wait and see," said
Budi Ruseno, an analyst from PT Bhakti Investama.
Budi said that he noticed the index went up unexpectedly
during late trading.
"The index surged at the very end of the day's session. This,
of course, raised suspicion of intervention," he said.
He said the slow-moving index finally was able to close higher
after it reached more than minus seven points in the morning
session.
He said that he saw a noticeable surge in the price of big cap
stocks in very late trading.
"Cigarette maker PT Gudang Garam which was at Rp 17,950 in the
morning somehow closed the day's trading at Rp 18,400," he said.
Its competitor H.M. Sampoerna, which fell as low as Rp 15,525
in the morning, maintained to close at Rp 15,700. State-owned
telecommunications company PT Telkom was at Rp 2,975 in the early
trading but closed at Rp 3,025, Budi said.
Other big cap shares experiencing similar fluctuations were
giant automaker PT Astra International, pulp and paper
manufacturer PT Indah Kiat and PT Tjiwi Kimia.
Another analyst said there was also late buying of cheap
shares by local investors on speculation the MPR would reject
Habibie's speech on Saturday, triggering a rally in the market.
(udi)