Rupiah remains firm, stock prices rebound
JAKARTA (JP): The rupiah closed slightly firmer against the U.S. dollar in moderate trading on Monday, while stock prices rebounded on government-backed buying of state-owned stocks.
Currency dealers said the rupiah again broke the 11,000 resistance level to reach an intra-day high of 10,950 against the U.S. dollar, but that it slid above 11,000 during the afternoon to close at 11,050, slightly up from Friday's close of 11,075.
Currency dealers said the strengthening of rupiah was spurred by market talks that the central bank would likely peg the currency at a certain level against a major foreign currency to reduce fluctuation.
"The central bank's intervention in the currency market over the past few weeks indicates that this could be true," a chief dealer with a local private bank said.
Several dealers said some state banks were seen selling dollars again on Monday on behalf of the central bank.
They said the rupiah's rise over the last two weeks from above 13,000 was driven by central bank intervention through state banks.
The market believes the government plans to spend dollars it gets from international lenders to bring the rupiah to a desired level, where it would be pegged, they said.
The central bank also plans to auction short-term promissory notes (SBIs) for three-, six- and 12-month maturities, a move to diversify from its one-month SBI auctions.
Bank Indonesia currently auctions only one-month SBIs every Wednesday. One-month SBIs averaged 70.4 percent per annum in interest during the bank's last auction.
"If excess funds can be absorbed using SBIs with longer maturities, the demand for dollars could be expected to dwindle. Only then could the central bank peg the rupiah's rate," the chief dealer said.
Higher
Stock prices on the Jakarta Stock Exchange (JSX) ended higher on Monday on the back of late buying of certain selected stocks, stockbrokers said.
The JSX Composite Index rose 3.42 points to 342.43 on a total turnover of 243.1 million shares changing hands valued at Rp 189.74 billion.
Stockbrokers said government-led buying orders in heavyweight telecommunications firms PT Telkom and PT Indosat prevented the price index from declining.
The stock prices of Telkom rose Rp 150 to Rp 2,350 on 8.9 million shares traded, while Indosat increased Rp 100 to Rp 7,500 on 284,500 shares.
Despite the increase, stockbrokers and analysts said the overall mood was still bearish, with most investors dumping their stocks as securities houses gave out advice to sell.
"Although the main index rose, the general tone is still bleak. So I don't see any reasons for the increase in the main price index," a broker with Mashill Jaya Securities said.
Head of research of Trimegah Securindo Lestari David Chang said the global recession, triggered by the ominous outlook of an economic downturn in Russia, would scare investors away from the hammered local market.
"There are some similarities between the Russian crisis and ours," he said, pointing to the current lack of investor confidence, unresolved political problems and mounting foreign debts as the main factors contributing to both countries' crises.
Poor results of most companies in the first semester due to mounting foreign exchange losses and high interest expenses had also further dampened the sentiment in the local market, he said.
"With the interest rates getting higher, the local market will continue to remain under pressure," Chang said. (aly/rid)