Rupiah slips to 8,700 mark on political apprehension
Rupiah slips to 8,700 mark on political apprehension
JAKARTA (JP): Mounting tension ahead of the People's
Consultative Assembly (MPR) meeting next week piled pressure on
the rupiah, which careened through the 8,500 psychological
barrier to 8,700 against the greenback.
Share prices in the local market surged 3.2 percent as most
foreign investors took advantage of a weakening rupiah to place
speculative buying orders on telecommunication and mining stocks,
brokers said.
Currency dealers said the rupiah, which opened at 7,900,
continued to decline to touch an intraday high of 8,700 in the
Jakarta spot market as dollar demand ahead of the MPR's session
next week continued to increase.
"We have seen quite a huge dollar demand by domestic banks," a
chief dealer with a joint venture bank said.
After learning that local banks placed large dollar demands,
offshore participants followed suit, pushing the rupiah near the
9,000 level, the dealer said.
It eventually closed at 8,450 in the Jakarta spot market --
compared to Monday's close of 8,050 -- as several state banks
stepped in to sell dollars to escape the 9,000 mark.
"If state banks did not guard the rupiah, the unit could have
broken the 9,000 level on Tuesday," the dealer said.
The special meeting of 1,000 members of the Assembly will
convene from Nov. 10 to No. 13 to determine the date for a
general election and pass the new electoral law.
Analysts expect a smooth session next week, but market
participants fear a widespread riot on the scale of the May riots
could reoccur.
"I think the heated fear on the political climate at home was
the main factor behind the rupiah's fall on Tuesday," another
dealer, pointing out that other currencies in the region,
especially the Japanese yen, ended firmer at around 115 to the
dollar on Tuesday.
Unlike the faltering rupiah, stock prices closed up 3.2
percent (9.98 points) at 317.18 on total turnover of 235.20
million shares valued at Rp 309.14 billion (US$36.36 million).
Gainers led losers by 52 to 18 with 72 stocks unchanged.
Stockbrokers said the 3 percent increase in stock prices was
in line with the rise in other regional equity markets amid
market expectation of lowered interest rates in the coming weeks.
"Though lingering fears over political stability still remain,
bullish sentiment in regional markets helped the local market to
rise," head of research of Sigma Batara Fadjar Limin Sutandi
said.
A broker with Trimegah Securindolestari said market
expectation of a further interest rate cut by the U.S. Federal
Reserve in the second week of this month had revived sentiment in
the local and regional equity market.
"But the general tone in our market is still cautious
especially in the leadup to the special session of the Assembly,"
said Fitri Murniati, an analyst with BNI Securitie.
Analysts and brokers said that they expected a smooth Assembly
session because violence and riots would not only detract from
the country's efforts to improve its economic condition, but also
dampen investor sentiment in the local battered market.
Brokers said most blue-chip stocks, especially of
telecommunication and mining stocks, were the investors' main
buying targets on Tuesday. PT Telkom rose by Rp 150 to Rp 2,175
on a total turnover of 20.67 million shares, mining firm Tambang
Timah by Rp 475 to Rp 4,925 on 1.05 million shares and PT Aneka
Tambang by 25 to Rp 1,375 on 23.42 million shares. (aly)