Rupiah hits 7,950 to dollar despite political tension
Rupiah hits 7,950 to dollar despite political tension
JAKARTA (JP): The rupiah broke through the important 8,000
psychological barrier to hit an intraday high at 7,950 against
the U.S. dollar on Tuesday buoyed by the day's peaceful
proceedings of the Special Session of the People's Consultative
Assembly (MPR), currency dealers said.
They said that intervention by the central bank, which stepped
into the market through certain offshore banks, also contributed
to a stronger rupiah.
"Unlike the previous days, the central bank sold its dollars
for rupiah through several offshore banks," a chief dealer with a
joint venture bank said.
Dealers said that the rupiah, which was traded thinly, closed
slightly firmer at 8,100 to the dollar Tuesday as offshore banks
kept on selling dollars.
"Bank Indonesia unloaded dollars for rupiah when the rupiah
was at the 8,500 and 8,300 levels," the dealer said.
The rupiah's close on Tuesday was 4 percent firmer than its
Monday close at 8,450.
Dealers said that positive comments by the International
Monetary Fund (IMF)'s officials who said that the beleaguered
rupiah still had more room to appreciate against the American
dollar also helped to uplift market sentiment.
IMF's first managing director Stanley Fischer said in Canberra
Tuesday that a rupiah-dollar exchange rate of between 6,500 and
7,000 against the American dollar was deemed sustainable.
"If the currency were to stop in the vicinity of 6,500 to
7,000 to the dollar, you would find yourself with a devaluation
in real terms roughly similar to that in the other crisis
countries in the region of 25 percent to 35 percent," Fischer
said as quoted by Dow Jones Newswires.
"That should be sustainable," Fischer said.
Governor of Bank Indonesia Sjahril Sabirin said that Fischer's
comments were realistic given the peaceful proceedings of the
Special Session of the MPR on Tuesday.
However, most currency dealers said many market players were
sill uncertain about the security for the remaining three days of
the session.
"Despite the rupiah's strong gains on Tuesday, the market's
general tone remains bearish for the rupiah in the coming days,"
another dealer said, pointing out that the currency was predicted
to swing between 8,000 and 9,000 in the days ahead.
Unlike the rupiah, stock prices in the local market declined
with the main price gauge falling 1.9 percent (7.08 points) to
357.30 on a total turnover of 324.92 million shares changing
hands for Rp 432.18 billion (US$53.35 million).
Stockbrokers said that lack of fresh leads at home coupled
with market speculation that the country's political worries
would turn tumultuous had kept share prices under severe selling
pressures.
"I think investors are scared to buy at this point in time as
political concerns may lead to more political tumult," analyst
Johanes Salim of Mashill Jaya Securities said.
Analysts said that persistent calls by Indonesian political
groups demanding the assembly brings former president Soeharto to
court for the alleged corruption during his 32-year regime and to
scrap the military's role in the parliament might further fuel
political tension.
"Differing stances on this may result in another huge round of
violence," another analyst warned. (rei/aly)