Rupiah remains firm, stocks rise slightly
JAKARTA (JP): The rupiah failed to continue its rally against the U.S. dollar on Tuesday, closing at 7,400, similar to its close on Monday, currency dealers said.
Currency dealers said that most market participants were reluctant to build any position in the run-up to the special session of the People's Consultative Assembly (MPR), which is scheduled for Nov. 10 to Nov. 13.
"Some operators were reluctant to unload their dollar holdings ahead of the meeting," a chief dealer with a local private bank said.
He said that offshore and local operators who had built a long dollar position at 12,000 and 13,000 were unwilling to sell their dollars at the rupiah's current level of around 7,000.
Currency dealers said that trading on the rupiah was quiet on Tuesday following a rally which pushed the rupiah up to an intraday high of 7,300 on Monday, following reports that the Indonesian government was considering the reintroduction of an intervention band to limit fluctuation in the rupiah exchange rate.
"Trading activities remained dull because there was no fresh leads to swing trading sentiment," the dealer said.
The rupiah was traded within a narrow range of 7,350 to 7,750 to the dollar on Tuesday.
Bank Indonesia Governor Sjahril Sabirin said on Tuesday that the rupiah would likely hold onto its gains in the days ahead as the country's economy had shown signs of recovery.
He declined, however, to give an ideal level for the rupiah- dollar exchange rate.
Last week Sjahril expressed optimism that the rupiah still had potential to advance to between 6,000 and 6.500 against the American dollar.
But currency dealers said that movement on the rupiah would likely depend on how the Japanese yen fared against the American dollar in the coming days.
The Japanese yen closed its Asian trading at 119.59 on Tuesday, lower than its Monday's close at 119.10.
"If the yen breaks through the 120 level to the dollar, then the rupiah will come under severe pressure," another dealer said, adding out that he expected the rupiah to be traded in range of between 7,200 and 7,700 on Wednesday.
Share prices in the local market closed slightly firmer on Tuesday because some investors bought certain blue chip stocks which declined on Monday.
"But trading activities remained dull," an institutional sales broker with Trimegah Securindolestari said.
The Jakarta Stock Exchange (JSX) Composite Index rose 2.79 points to 318.10 on a total turnover of 134.13 million shares valued at Rp 132.92 (US$17.96 million).
Edhi S. Widjojo, an analyst with Mashill Jaya Securities said that investors remained afraid to enter the country's shattered bourse due to lingering uncertainties in the country's political environment.
"The country's political risk is still high and this has prompted investors to continue shunning the market," he said.
Trimegah's broker said that several foreign brokerage firms including Jardine Fleming Nusantara and Vickers Ballas Tamara placed more selling orders than buying orders on Tuesday.
"It shows that foreign investors are still worried about our market here," the broker said.
Stock prices for mining firm PT Tambang Timah rose by Rp 100 to Rp 4,500 with 579,500 shares changing hands, PT Telkom rose by Rp 50 to Rp 2,075 with Rp 6.86 million shares traded, and international call operator PT Indosat shares rose by Rp 225 to Rp 8,175 on 319,500 shares changing hands. (aly)