Rupiah hits another low, stocks down

JAKARTA (JP): The rupiah fell yesterday to a new historic low of 3,220 against the U.S. dollar on domestic dollar covering and stock prices trailed down, dealers and brokers said.

Currency dealers attributed the rupiah's fall to a combination of improving rupiah liquidity, increasing dollar demand and a sharp fall in other regional currencies, especially the Malaysian ringgit.

Spot rupiah dropped to a new low of 3,320 in the afternoon, compared with the day's opening of 3,125/3,235 and Friday's close of 3,100/3,122. It closed at 3,215/3,220 yesterday.

Future contracts for tomorrow and today rupiah ended at 3,215.75/3,220.65 and 3,185.5/3,190.5 respectively.

One state bank chief dealer said many local corporate companies entered the market yesterday looking for dollar. As no local players sold dollar, overseas operators could easily push down the rupiah.

"Again, the fall was exacerbated by a thin market and small selling from Singapore players," he said.

"Once local corporate companies withdraw from the market, dollar would definitely ease against the rupiah," he added.

Despite the dollar's drastic surge in the spot market, dollar was getting cheaper in the forward and swap markets, he said.

Swap premiums even dropped to negative for overnight, tomorrow/next contracts. Overnight swap was at -2.0/-1.5 and tom/next was at -0.7/-0.5 points.

One-week swap was at 1.5/3.0, one-month at 21/24, two at 45/55, three at 75/85, six at 175/190 and one-year at 370/400.

Currency dealers said swap rates fell across the curve on ample rupiah liquidity in the money market and the prospect of lower rates.

Bank Indonesia, the central bank, has been easing liquidity gradually in the past two weeks and cutting benchmark interest rates to reduce the costs of funds for the economy.

But unlike the previous Mondays, the central bank kept interest rates for bilateral papers (SBIs) unchanged yesterday.

The central bank offered overnight SBIs at 15 percent, two- to four-day at 16 percent, seven-day at 17 percent, two-week at 19 percent, one-month at 21 percent, three at 19 percent, six-month at 12.125 and one-year at 12.75 percent.

Dealers said the rupiah was slightly helped by the central bank's decision not to change key rates, despite the anticipation of another rate cut yesterday.

Yesterday's fall in the currency market permeated into the stock market.

The Jakarta Stock Exchange composite index, the main indicator of local share prices, fell 0.7 percent or 3.682 points to close at 546.238.

Total turnover was 185.23 million shares worth Rp 266.14 billion (US$83.17 million).

Stockbrokers said the market was dull yesterday, with most investors staying on the sidelines following the rupiah's collapse and failed expectation on rates cut.

Vice president of Mashil Jaya Securities, Tjandra Kartika, predicted that the local stock market would remain sluggish in the short-term due to high rates and relatively tight liquidity.

"People hardly have enough funds to buy stocks now," Tjandra said.

Nevertheless, some big capitalized stocks like telecommunications firm Telkom, cement firm Semen Gresik, cigarette makers Gudang Garam and Sampoerna made gains yesterday.

Telkom increased 50 rupiah to 3,600 rupiah, while Semen Gresik rose 125 rupiah to 3,300 rupiah.

Cigarette producer Gudang Garam rose 200 rupiah to 9,300 rupiah while Sampoerna inched up 50 rupiah to 6,750 rupiah. (aly/rid)

New lows -- Page 11