Rupiah remains weak despite IMF's assurance

JAKARTA (JP): Rupiah remained weak yesterday despite the International Monetary Fund's (IMF) encouraging statement about its forthcoming aid for Indonesia.

The rupiah continued to tumble, hitting an intraday low of 14,500 in early trading but recovered slightly to 14,000 at the end of trading yesterday.

It had closed at 13,900 the previous day.

"Though the rupiah remains weak, it managed to recover slightly due to profit-taking by some operators ahead of the weekend," a dealer with a local private bank said.

Currency dealers said that the weak sentiment in the regional currency market and escalating protests on the country's political and social fronts further dragged down the currency,

The IMF's Asia Pacific director Hubert Neiss said yesterday that the agency would speed up the disbursement of its next loan tranche to Indonesia.

But his statement elicited no positive response in the market.

Neiss said the rupiah's plunge against the U.S. dollar was attributed to a combination of internal developments and external factors, including weakness across Asian markets this week.

"The rupiah has been weak for a while because of the economic situation in Indonesia, and that has not yet turned around," he told reporters after meeting President B.J. Habibie yesterday .

"And the rupiah has absorbed the effects of the regional disruption,' he said.

"The whole situation in the region has deteriorated in the last few days and the rupiah has weakened with it," he said.

An economist with Danareksa Sekuritas, Raden Pardede, said that persistent unresolved political uncertainties at home remained a major obstacle to the rupiah and stock market's recovery.

Following the bearish rupiah, the main index on the Jakarta Stock Exchange (JSX) closed 0.8 percent lower yesterday, falling 3.17 points to 408.37 on a total turnover of 296.16 million shares on the regular market worth Rp 328.15 billion (US$23.43 million).

Brokers attributed the fall to profit taking by most investors on the gains they made on cross-listed stocks like PT Telkom, Indosat and Tambang Timah.

Stock prices for the above three stocks account for 30 percent of the total market capitalization on the local exchange.

Telkom's share price fell Rp 150 to Rp 3,550 on a total turnover of 2.89 million shares, Indosat shed Rp 1,525 to Rp 15,175 on 1.23 million shares and tin miner Tambang Timah slid Rp 75 to Rp 6,900 on 360,000 shares traded.

Brokers said most investors were concentrating on one-day trading activities.

"There is no medium or long-term investors in the local market," a broker with Bali Securities said.

The head of Sales of Bahana Securities Bruce Rolph said yesterday that the country's crippled financial market and economy was further withered by a bleak economic outlook this year with soaring inflation and predicted growth of minus 10 percent.

"The overseas general view on Indonesia is bad causing more offshore funds to get rid of the local market," he said.

Though Rolph praised the government's painstaking measures to cope with the country's economic and political crisis, more measures had to be taken.

"President Habibie has done positive things but the country's problems are so big that much more has to be done," he said. (aly/prb)