Rupiah sinks to 14,700 as stocks lose grounds
Rupiah sinks to 14,700 as stocks lose grounds
JAKARTA (JP): The rupiah sank 5 percent yesterday to close at
14,700 against the U.S. dollar as the Japanese yen touched its
lowest level since August 1990.
The stock market, battered by sinking turnover, slid 0.46
percent despite gains in dollar-valued stocks which were buoyant
on the rupiah's fall.
Stock analysts said that prevailing uncertainties about
domestic political and economic stability were also dragging the
market down.
"It is so difficult to expect the market to recover in the
near future as everyone is in crisis now," Harita Kencana
Securities president Christina Lim said.
She added the market could well sag further because confidence
was absent in a time of crisis and the market still feared that
mass rioting could recur at any time in the future.
"The market could go down further as there is nothing to look
forward to in the near future. People are still scared to invest
here. Even today, we heard people were rioting somewhere," she
said.
It was reported that hundreds of people continued rioting in
the town of Tegal in Central Java yesterday, damaging several
homes, offices and shops.
Currency dealers said the combination of domestic political
and economic uncertainty and a weak yen hit the rupiah, which was
already suffering from market illiquidity.
"The yen which fell below 146 to the dollar today (yesterday)
was the main culprit behind the fall of the rupiah," a dealer
with a local private foreign bank said.
The rupiah hit 15,000 yesterday afternoon before closing at
14,700. It had closed at 14,000 on Friday.
The dealer added that demand for dollars remained high,
especially from local commercial banks as Bank Indonesia extended
the deadline for them to settle outstanding arrears in their
interbank and trade finance debt to June 30.
"So, we can expect that the rupiah will not recover until June
30 as demand for dollars will remain," he said.
He added the sharp fall in the rupiah was aggravated by the
very thin trades, with the largest trade amounting to only about
one million dollars.
In the money market, dealers said the central bank set rupiah
interbank interest rates at 51 percent per annum for this week,
down from 53 percent last week.
"We can expect that the central bank is actually moving toward
lowering interest rates. We should welcome this move. But the
problem is that the IMF might not be happy with that kind of
move," Manaek Robert Toruan, the head of Bank Niaga's fixed
income desk, said.
The International Monetary Fund has said that the government
should maintain tight money policy to prevent inflation from
soaring further.
On the stock market, share prices on the Jakarta Stock
Exchange (JSX) lost 0.4 percent, with the JSX Composit Index
closing 1.871 points lower at 406.501.
Total turnover on the JSX was a meager US$18 million yesterday
after averaging only $17 million a day last week.
Stockbrokers said a heavier fall in the index was prevented by
gains in stocks with dollar valuations, like telecommunications
stocks Telkom and Indosat and tin miner Tambang Timah, as the
rupiah sagged to near 15,000.
"If you take Telkom and Indosat out of the market, the market
was actually a lot more depressed than you might think," an
analyst with a joint venture securities house said. (rid)