Rupiah remains volatile, stock prices down 3 percent
Rupiah remains volatile, stock prices down 3 percent
JAKARTA (JP): The rupiah continued its volatility on Friday
closing flat at 7,600 against the U.S. dollar as share prices
declined almost 3 percent on the back of the heated political
environment at home.
Currency dealers and stock analysts said that fears regarding
the country's political uncertainty had discouraged investors to
make a new position in both rupiah and stock trading.
Most investors were concerned that anti-government
demonstrations, which have taken places almost every day in the
country's major cities during the last two weeks, could get worse
and turn violent.
The analysts said that the protests might increase ahead of
the Special Meeting of the People's Consultative Assembly (MPR)
mid next month.
The MPR will hold a special session on Nov. 10 to Nov. 13 to,
among others, set the date and the rules of the general
elections. But students and most of the newly established parties
opposed the special session, saying that the MPR members, mostly
elected during the Soeharto administration, were no longer
legitimated to prepare such important events. They feared that
legal products to be produced by MPR's special session would only
benefit the ruling Golongan Karya (Golkar).
The analysts said most market participants did not want to
build any new long dollar positions on fears that the country's
political climate would turn into chaos, similar to the bloody
May riots which led to the resignation of the former president
Soeharto after 32 years in power.
"I think domestic factors tend the dictate the market now,"
the dealer said pointing out that previously the direction of the
rupiah was moved by external factors like the movement of
Japanese yen against the American dollar.
Dealers said that rupiah trading, in a range of between 7,400
and 7,700, remained thin for the whole day.
The rupiah, which opened at 7,500/7,700 closed almost
unchanged at 7,600 on Friday, slightly firmer than Thursday close
at 7,625.
Dealers said that limited dollar selling by state banks to
guard the rupiah, had managed to keep the rupiah from breaching
through the 8,000 psychological barrier.
"But we never know its direction in the coming days, if the
8,000 level is broken, we will have to see the rupiah touch
10,000 again," the dealer said.
Like the rupiah, share prices in the local market declined 2.7
percent (8.6 points) to 300.77 on a total turnover of around
243.41 million shares changing hands valued at Rp 960.19 billion
(US$126.31 million).
Losers led gainers by 67 to 23 with 76 stocks remaining
unchanged.
A broker with Trimegah Securindolestari attributed the sharp
decline to investors who continued to dump blue chip stocks like
PT Telkom, Indosat and cigarette maker Gudang Garam for profit
taking.
"Almost all blue chip stocks were under heavy selling
pressures on Friday,' the broker said.
Johanes Salim, an analyst with Mashil Jaya Securities said
that most investors did not want to hold their stocks in the
local battered bourse on escalating concerns over political
tension at home ahead of the special meeting of People's
Consultative Assembly next month.
"Most investors, especially the foreign ones are worried about
the country's political situation," he said pointing out that
anti-government rallies would weigh down the market sentiment.
Johanes said that most investors would move sideways in the
coming days because they did not see any fresh leads to uplift
market sentiment in the local shattered bourse.
"I think the stock prices will go down further as investors
continued discarding stocks," he said.
Share price of PT Telkom slid RP 150 to Rp 1,875 on a total
turnover of 8.01 million shares, Indosat slid Rp 100 to Rp 8,200
on 801,000 shares and cigarette maker PT Gudang Garam down by Rp
550 to Rp 6,850 on 1.21 million shares. (aly)