Rupiah sinks to 8,725 against dollar, local stocks up slightly

JAKARTA (JP): The rupiah sank against the U.S. dollar on Tuesday in extremely thin trading, with most major operators absent on the Chinese New Year holiday.

Currency dealers said the rupiah, despite opening stronger in a range of 8,450 to 8,500 against the greenback, fell back at the close to 8,725.

They said trading turnover on the local foreign exchange market dropped 20 percent to US$40 million from $50 million the previous day. Daily trading turnover usually averages about $100 million.

"Trading volume continued falling as most market participants are still on their holiday," a chief dealer with a joint venture bank in Jakarta said.

Dealers said the rupiah failed to maintain its upward trend in the afternoon due to persistent demand from the domestic market.

The fall in the yen against the dollar during the day was the main contributant to the rupiah's drop, the analysts said.

Dealers said the dollar was bullish against the yen after the Japanese government announced new steps to curb the recent rise in long-term interest rates.

Reports said the Bank of Japan expected the rates would fall with the help of Friday's reduction in the call rate target to 0.15 percent from 0.25 percent.

The yen closed at 116 on Tuesday, down from 114.66 on Monday.

Currency dealers expected the rupiah to remain weak against the dollar in coming days despite Bank Indonesia's intervention plan.

"Though Bank Indonesia stepped into the market on Tuesday, it failed to lift sentiment on the rupiah," a dealer said.

Unlike the sagging fortunes of the rupiah, share prices on the local market ended 0.4 percent firmer, with the Jakarta Stock Exchange (JSX) Composite price index rising 1.92 points to close at 398.84 on total turnover of 44.79 million shares valued at Rp 43.74 billion.

Gainers surpassed losers 32 to 20 with 78 stocks unchanged.

Stockbrokers and analysts said trading turnover further declined to Rp 43 billion on Tuesday from Rp 60 billion the previous day, with several regional equity markets closed for the Chinese New Year.

"Most fund managers are still enjoying their holiday so trading volume declined," Imelda Kwan, an institutional sales broker with Trimegah Securindolestari, said.

Stockbrokers said local bargain-hunting on select low-priced blue-chip stocks in anticipation of a rebound after the holiday kept the main index in positive territory.

"But such buying sentiment was only short-lived because of no positive factors from domestic and offshore markets," an analyst with a local securities firm said.

However, Imelda said certain foreign brokerage firms such as ABN Amro and Indosuez WICarr were active in placing buying orders on lower-priced blue-chip stocks. (aly)