Rupiah plunge to 14,175, stocks continue gains

JAKARTA (JP): The rupiah returned to its all-too-familiar bearish territory yesterday, plunging to 14,175 against the U.S. dollar. The stock market, meanwhile, maintained its bullish run.

Currency dealers said the rupiah gave up some of last week's gains on regional weaknesses and concerns about sporadic looting as well as comments by President B.J. Habibie on the ethnic Chinese community.

They said the rupiah's fall yesterday was aggravated by state banks' move to sell the currency for dollars to cover their short dollar positions after selling a significant amount of dollars last week.

"The rupiah lost support from state banks as they all scrambled for dollars today (yesterday)," a dealer with a local private bank said.

The rupiah, which closed last week at 13,350 against the U.S. dollar, ended yesterday's trading at 14,150, slightly above its intraday low of 14,400.

Dealers said the good news from the International Monetary Fund on new loans was mitigated by regional weaknesses and domestic security concerns.

They said reports about looting at a cooking-oil kiosk at a food fair in Jakarta on Saturday and looting at shrimp farms in Tangerang, West Java, coffee plantations and staple food warehouses in East Java were also weighing on the currency.

Habibie's comments in an interview with The Washington Post, in which he downplayed the need for ethnic Chinese businessmen to return to the country, also contributed to the fall, dealers said.

The negative sentiment in the foreign exchange market permeated the Jakarta Stock Exchange (JSX), which suffered a 1.6 percent drop in morning trade.

But late buying on some stocks saved the market from closing in negative territory.

The JSX Composite Index closed 0.5 percent, or 2.451 points, higher at 488.685. Trading turnover totaled 354.12 million shares valued at Rp 422.22 billion (US$29.8 million).

Stockbrokers said the rise seemed to be engineered as it only came in the last few minutes of trading.

Harita Kencana Securities' research head Karman Pamurahardjo said there were few fundamental reasons for the local market to make further gains as it had been overbought recently.

"The perception in general is that the market has been overbought. And logically, it should go down for a while on profit taking," Karman said.

"But, so far, the market has defied analysts' predictions.

"So, my prediction is that if the index could surpass the resistance level of 490, 492 points, it would go up further to crack the 500 barrier. But if not, it will decline on profit taking." (rid)