Rupiah shoots up to 10,000 against greenback, shares dip
Rupiah shoots up to 10,000 against greenback, shares dip
JAKARTA (JP): The rupiah continued to rally for the second
consecutive day on Tuesday, rising 5.4 percent to close at 10,000
against the U.S. dollar, currency dealers said.
They said market talk on the possibility of more diligent
monitoring of capital flows and persistent dollar selling by
several state banks contributed to the rupiah's strong standing.
But talk of monitoring capital flows caused share prices on
the bruised local market to slide further, with the benchmark
price gauge falling 1.2 percent, stockbrokers said.
Currency dealers said that most offshore operators, especially
those from Singapore, were unnerved by talk of capital controls
after the rupiah breached the 10,500 level during the morning
trading session.
"Singapore operators sell their dollars whenever the rupiah
breaches the 10,500 level," Freddy Khou, country treasurer of
CitiBank Indonesia, said.
Tuesday's closing price of 10,000/10,100 against the dollar
was 5.4 percent higher than Monday's close of 10,575.
Talk of capital controls emerged in Jakarta again on Monday
after Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita said the government was studying ways of
monitoring foreign exchange flows into and out of the country.
The measures under consideration include requiring firms to
deposit export earnings in domestic banks.
Sentiment on the rupiah was also boosted by improving
sentiment on regional currencies, most of which recorded big
gains on Tuesday, dealers said.
They said the rupiah was also buoyed by moderate but
persistent dollar-selling by several state banks.
"Although the amount was limited, dollar selling by state
banks succeeded in improving sentiment on the rupiah on Tuesday,"
another dealer with a local private bank said.
The dealer predicted that unfaltering bullish sentiment on the
rupiah would soon bring the currency back above the 10,000 level.
However, lingering fears over the possibility of political
unrest ahead of the Indonesian Democratic Party (PDI) congress in
Bali from Oct. 8 to Oct. 10 could curtail the rupiah's upward
trend, he added.
"But if there are no reports of clashes, the rupiah should go
on toward 9,500 (against the dollar)," the dealer said.
Despite the strengthening rupiah, stock prices on the Jakarta
Stock Exchange (JSX) closed 1.2 percent lower, with the JSX
Composite Index falling 3.20 points to 258.10.
Trading turnover was valued at Rp 145.56 billion (US$14.5
million), with 282.34 million shares changing hands.
The institutional sales director with Mashill Jaya Securities,
Antonio Yongnata, said foreign selling pressures on certain blue
chip stocks had been responsible for the falling index.
Talk of capital controls and the bleak outlook for most listed
firms have triggered a selling spree among foreign investors, he
added.
"Share prices for some big cap stocks are undervalued but
investors never know whether prices reflect the companies real
fundamentals," he said.
The head of research at Sigma Batara, Fadjar Limin Sutandi,
added that foreign investors would continue to shun Indonesia
while its medium and long-term economic outlook remained gloomy.
Besides, he added, they have been discouraged by the
government's slow response to the country's dire economic
conditions. (aly)