Rupiah lets gains slip, stock prices lose more ground

JAKARTA (JP): The rupiah failed to sustain gains from earlier in the week against the U.S. dollar yesterday, closing slightly lower in moderate trade due to the weak yen and market concerns over China's possible devaluation of the yuan.

Currency dealers said movement of the yen, which significantly dictated the direction of all regional currencies, was a determinant factor in the rupiah's slide yesterday.

The rupiah, which traded in a range between 12,650 and 12,850 against the American dollar, ended at 12,800 in the Jakarta spot market, slightly lower than its 12,700 close the previous day.

"I think the weakening yen caused the rupiah to fall against the dollar. If the yen had not been so weak, the rupiah might have broken the 12,500 level," a chief dealer of a local private bank said.

Some dealers had speculated the rupiah would break the 12,500 psychological level yesterday.

The rupiah lost the support from state banks which bought the currency during the last few days, dealers said.

"Since there were no dollar selloffs by state banks yesterday, the rupiah failed to gain ground," a dealer with another private bank said.

Dealers said absence of any fresh leads in the market combined with market concerns over a possible rally ahead of the commemoration of the country's independence day on Aug. 17 would likely sour the market sentiment.

"While the country is struggling to solve its political and security problems, concerns about another social outbreak prior to Aug. 17 is escalating," a dealer said.

"Just wait until next week. If there is another major demonstration or even social riots, the rupiah will surely tumble again, but if not the unit will continue to make headway."

Falling in line with the rupiah's slide, stock prices on the Jakarta Stock Exchange (JSX) continued to lose ground, sparked by panic selling by some investors ahead of weekend, stockbrokers said.

The JSX Composite Index fell 2.4 percent or 10.22 points to 423.61 on a total turnover of 433.83 million shares changing hands valued at Rp 273.87 billion (US$21.39 million).

Stockbrokers and analysts said the sluggish condition in the country's battered market caused the daily trading transaction value to drop drastically by almost 70 percent to about Rp 200 billion, compared to Rp 600 billion during the precrisis period last year.

"This bearish sentiment coupled with the shunning by foreign investors has forced our market to tumble further," an analyst with local securities house said.

Brokers said bearish sentiment in the regional market infiltrated the local market, and most offshore institutional investors unloaded their portfolio investment.

"There was nothing special today (yesterday), most foreign institutional investors continued to dump the blue chip stocks they bought the previous weeks," said Antonio Yongnata, an institutional sales manager of Mashill Jaya Securities.

Other brokers agreed, saying that massive selloffs in telecommunication stock PT Telkom and PT Indosat, state general mining firm PT Aneka Tambang and pulp and paper producer PT Tjiwi Kimia had caused the main price index to fall.

The stock price of Telkom fell Rp 25 to Rp 3,600 on 9.77 million shares yesterday, Indosat shed Rp 900 to Rp 11,100 on 702,000 shares, nickel producer PT Aneka Tambang dropped by Rp 100 to Rp 2,250 on 2,94 million shares yesterday while pulp and paper producer Tjiwi Kimia fell Rp 225 to Rp 2,200 on 1.89 million shares. (aly)