Rupiah remains weak but stock prices up slightly

JAKARTA (JP): The rupiah remained weak yesterday due to political uncertainty but share prices rose slightly in thin trading on the wake of late buying support.

Currency dealers said the rupiah received no respite from last week's debt accord or the likelihood of the release of the International Monetary Fund (IMF)-brokered bailout package late this week.

The rupiah closed weaker at 11,850 against the greenback, 2 percent lower than its close at 11,600 the previous day.

Dealers said most market operators remained concerned over the country's political and social uncertainties.

"Offshore funds continue to sideline the market and put their funds in other currencies like the Thai baht, Malaysian ringgit and Singapore dollar," a dealer with a local private bank said.

Dealers said commercial demand for the dollar coupled with labor protests, such as those in Surabaya, East Java demanding the Maspion Group raise their wages, put more pressure on the rupiah.

"If similar protests take place in other cities, a possible outbreak is likely to happen which would cause greater political unrest," the dealer said.

"If this happens, no offshore funds would come to trade the rupiah," the dealer said.

Dealers said that if discussions between an IMF team and the government to review the IMF-led assistance program bore fruit, the rupiah's value could improve against the dollar.

"But even if the IMF resumes the loan, it will not greatly strengthen the rupiah's value," the dealer said, pointing out that the country was struggling to face food shortages, skyrocketing inflation rates and massive unemployment.

The dealers also attributed the weakening rupiah to a contagion effect from the yen's fall against the American dollar.

The Japanese yen was quoted at 140.3 to the dollar yesterday, up from its low at 141.05.

But unlike the rupiah, stock prices on the Jakarta Stock Exchange (JSX) took a mild turn for the better yesterday with the main benchmark price index climbing 1.65 points to 411.07 on a total turnover of 177.2 million shares worth Rp 175.73 billion (US$15.95 million).

Stockbrokers said trading activities remained lethargic as most investors sidelined themselves from the country's battered market due to the political situation.

"Although the index rose, trading activities remained lethargic with most investors dumping all the stocks they held," a securities broker with Mashill Jaya Securities said.

Brokers attributed the increase in stock prices to late buying on state-owned gold mining firm PT Aneka Tambang and cement maker PT Semen Gersik.

Stock prices for Aneka Tambang rose Rp 75 to Rp 1,475 yesterday on a total turnover of 5.94 million shares on the regular market. Semen Gersik's stocks climbed Rp 1,000 to Rp 6,400, with 3.1 million shares changing hands. (aly)