Rupiah sinks to 15,000 and stock prices slide

JAKARTA (JP): The rupiah sank yesterday past the 15,000 level to the U.S. dollar, and stock prices dipped 2.3 percent over profit taking after a week of gains.

Currency dealers and stockbrokers said the market lacked any incentives at a time of political infighting, violence in some parts of the country and continued economic turmoil.

Dealers said the main cause of the rupiah's slide was heavy dollar buying offshore as the market was still concerned with news about secessionist disturbances in Irian Jaya and rioting in the usually sleepy wood-carving town of Jepara in Central Java.

In addition, state banks, which sold the rupiah for dollars on Tuesday, were still bidding for dollars in the morning which further pushed down the rupiah.

"I don't know what really has been driving the rupiah down these past two days. One possible answer is the continuing rupiah selling by some state banks," a dealer with a local private bank said.

The rupiah opened the day at 14,700 and weakened to pass the 15,000 level in the morning before closing at 14,900. The currency closed at 14,700 on Tuesday and 14,500 last Friday.

Dealers said trading was still lackluster as many operators were taking a wait-and-see attitude amid heightening domestic political infighting, especially inside the ruling Golkar functional group ahead of its extraordinary convention to choose a new chairman.

Meanwhile, stock trading on the Jakarta Stock Exchange (JSX) remained active yesterday, with most investors selling their holdings to cash in profits, stockbrokers said.

In the morning, some investors still continued buying in state-owned companies to benefit from future gains. However, selling suddenly took over the market which pushed down the main price index.

The JSX Composite Index closed 10.965 points lower at 472.980, with total turnover of 224.03 million shares valued at Rp 303.91 billion (US$20.26 million).

Harita Kencana Securities' head of research Karman Pamurahardjo said: "It's total profit-taking after a sharp rice in stock prices during the past week."

Besides, he said the market was hit by news that the country's gross domestic products contracted by 12.3 percent in the first half of this year compared to the same period of last year.

"That's beyond market expectations," he said.

Karman said he had anticipated such a drop in the main price index after learning that the market had been overbought during the last few days.

"The market will continue its slide in the next few days as it has been overbought, and I think investors will take a pause and enjoy profits," he said.

He said the country's economic and political fundamentals were not strong enough to sustain a prolonged rally.

"There are so many unresolved matters and uncertainties like what the government will do with troubled banks and when the International Monetary Fund will disburse its loans."

Nevertheless, Karman said, the market could enjoy gains again when the government unveiled potential investors for publicly listed state firms like tin miner PT Tambang Timah and gold and nickel miner PT Aneka Tambang.

The market ignored rumors that the government and a foreign company may soon close a deal on privatizing Aneka Tambang.

Aneka Tambang slid Rp 100 to close at Rp 1,950, while Tambang Timah gained Rp 75 to end at Rp 7,600.

Last week Semen Gresik led the market rally following news that international bidders had offered the government a much higher price than expected for its stake in the cement maker.

The government announced at the weekend that it had selected Mexico's Cementos Mexicanos SA de CV (Cemex) as the preferred bidder after it offered to buy 35 percent of the government stake in Semen Gresik at $1.38 per share.

Stocks in Semen Gresik, which rose Rp 3,200 on Tuesday, slid Rp 350 to Rp 12,000.

Heavyweight state-owned domestic telephone monopoly PT Telkom dipped Rp 25 to close at Rp 4,350, while state-owned satellite operator PT Indosat remained unchanged at Rp 17,800.

Cigarette giant PT Gudang Garang dropped Rp 525 to Rp 9,275 and competitor PT HM Sampoerna slid Rp 100 to Rp 2,325. (rid)