Rupiah recovering from assaults
Rupiah recovering from assaults
JAKARTA (JP): The Indonesian rupiah, helped by the central
bank's intervention, recovered yesterday from speculative attacks
that drove it to a historic low Monday, dealers and brokers said.
They said the rupiah strengthened to 2,570/2,575 against the
U.S. dollar from an opening of 2,633/2,643 after the central bank
intervened in the market at midday.
The rupiah was quoted at 2,578/83 at 16:30 Jakarta time, the
close of local trading. The rupiah plunged to a historic low of
2,650/2,655 Monday.
The stock market also found support, with the composite index
gaining 0.04 percent in the afternoon before easing back to
711.44 points, down 0.13 percent at the close of late profit
taking.
The index fell 1.6 percent to 712.40 points Monday as rupiah
panic spilled over to the stock market.
Minister of Finance Mar'ie Muhammad said the government had no
plans to change monetary policy in the wake of the speculative
assaults on the rupiah.
"The government is optimistic that the situation is
improving," Mar'ie told journalists after accompanying the
president of the Asian Development Bank, Mitsuo Sato, meeting
President Soeharto.
He said the turmoil in the currency market was speculative and
it could not continue for long because speculation implied a hit-
and-run strategy.
"The most important things are that our fundamentals are
strong and the government will continue to pursue a consistent
monetary policy," Mar'ie said.
Bank Sumitomo's Singapore branch manager Yasuji Sumitomo
supported Mar'ie, saying the current attacks on the rupiah would
not reduce foreign confidence in Indonesia's economic
performance.
Speaking to journalists after signing an $80 million loan
agreement to the Bimantara group here, Sumitomo said the
weakening of the rupiah should not be a concern for foreign
creditors.
Minister Mar'ie assured the public that the government had
enough reserves to fight back against speculators.
Dealers said Bank Indonesia, the central bank, injected some
$1 billion into the foreign exchange market yesterday through
state and local private banks.
The central bank pumped some $500 million into the market
Monday, when rupiah made the largest single-day loss by
plummeting almost 5 percent.
Yesterday, the central bank entered the market at midday
through state banks, forcing the dollar to 2,570/2,575 level.
"This intervention triggered cut-loss selling in dollars," a
dealer with a local private foreign exchange bank said.
"The central bank should continue to protect the rupiah
because I think the battle is not yet over. They (speculators)
may just stay aside when the central bank intervenes and are
ready to counterattack later," a dealer at another foreign
exchange bank said.
Besides direct intervention, the central bank also used market
operation by raising short-term money rates to discourage
speculators from borrowing rupiah to buy dollars.
The central bank raised the rates for one-to-six day Bank
Indonesia Certificates (SBI) by about 25 basis points yesterday
to 12 percent.
But it maintained the seven-day SBI at 7.5 percent, two-weeks
at 8.5 percent, one-month at 10.5 percent, three-months at 11.0
percent, six-months at 11.625 percent and one-year at 12.25
percent.
Securities analysts and brokers said the rupiah recovering
yesterday had helped trading activities in the capital market
yesterday.
"The trading activities was considered flat yesterday because
investors are in a 'wait and see' position on where the rupiah is
leading," Sales Director of ING Baring Securities Darwin Sutanto
said yesterday.
Schroders Indonesia's John Rachmat said though the market was
dull yesterday, stock transaction activities would recover later
this week. (aly/rid)
Agenda -- Page 10