Rupiah plunges to 9,475 as stocks fall nearly 5 percent

Rupiah plunges to 9,475 as stocks fall nearly 5 percent

JAKARTA (JP): The country's financial market succumbed on
Monday, after one week off, with the rupiah plunging to an
intraday low at 9,475 against the U.S. dollar and stocks tumbling
nearly five percent.

Currency dealers said the country's beleaguered rupiah took
another beating, sinking sharply to a three-month low on market
fears that the country would be gripped by another wave of
antigovernment demonstrations and hit by the devaluation of the
Chinese yuan.

"I think these are the two negative factors which caused our
financial market to fall," a chief dealer with a joint venture
bank said.

"But market talk that students will go out on to the streets
again in the coming days have especially pressured the rupiah,"
he added.

The rupiah opened already low at 9,000/9,200 against the
dollar and fell to an intraday low at 9,475 in morning trade. The
local unit then eased in the afternoon and closed the day's
trading at 9,300.

Dealers said offshore operators again bought dollars on
Monday, giving no room for the rupiah to really recover. Demand
for the dollar also came from certain state-owned banks, which in
the past weeks have usually sold their dollar holdings to defend
the local unit.

The strong dollar demand kept the rupiah trading within a
tight range of between 9,200 and 9,350 for the whole trading day.

Dealers and analysts predicted that strong demand for dollars
would continue to rise amid the worsening political situation at
home.

They predicted that the rupiah could eventually breach the
psychological boundary of 10,000 to the greenback in the coming
few days if the planned antigovernment demonstrations turned
violent.

" The rupiah's fate is totally dependent on the market
response to demonstrations in the coming days," a dealer with a
local private bank said.

As with the rupiah, share prices in the Jakarta Stock Exchange
(JSX) tumbled 4.9 percent on Monday with the JSX Composite Index
-- the main price gauge -- falling 19.92 points to close at
382.47.

Trading turnover totaled 166.62 million shares changing hands
for Rp 243.87 billion.

Decliners easily outdistanced advancers by 93 to 8 with 42
stocks remaining unchanged.

Stockbrokers and analysts attributed the almost 5 percent fall
in the local stock market to a general fall in other regional
markets and escalating concerns over persistent social unrest in
the country.

"Our financial market is hit by both external and domestic
factors," the head of research at Panin Sekuritas, Anton Karlam,
said.

The research director of Mashill Jaya Securities, Edhi S.
Widjojo, agreed and said: "More and more bad news coming into the
market, such as of social riots at home and a possible
devaluation of the Chinese yuan."

Vonny Juwono, an institutional sales broker with Trimegah
Securindolestari, said foreign and domestic investors had not
found any fresh leads inducing them to reenter the market.

"It was another poor trading day," she said.

She said that dual listed firms such as state-owned
telecommunications outfit PT Telkom, Indosat and pulp and paper
firm PT Tjiwi Kimia, which usually benefited from a weaker rupiah
through arbitrage trading, mostly fell on Monday due to a lack of
fresh incentives.

Telkom lost Rp 50 to close at Rp 3,275 on 26 million shares
changing hands. Indosat fell Rp 1,000 to Rp 9,600 on 1.5 million
shares, Tjiwi Kimia slid Rp 125 to Rp 1,650 on 3.3 million
shares.

Stockbrokers and analysts said that the country's battered
market would continue to be under pressure in the coming days as
investors were watching closely any development in the country's
social and security conditions. (aly)