Rupiah stabilizes against dollar as stocks lose ground
Rupiah stabilizes against dollar as stocks lose ground
JAKARTA (JP): The rupiah continued to stabilize against the
U.S. dollar yesterday to close at 3,250/70 in comparison to the
opening of 3,200/30 in the morning session after Bank Indonesia,
the central bank, stepped in the market several times.
"The central bank was seen in the market selling dollars when
the rupiah was at 3,210 and 3,240," a chief dealer with a private
bank said.
The dealer could not confirm the amount of dollars sold.
Dealers said swap rates increased in both domestic and
offshore markets on fears of tight rupiah liquidity following
concerted intervention by three central banks on Monday.
"The persistent intervention by the central banks was likely
aimed at bringing the rupiah to below 3,000," a dealer said.
Dealers said intervention by the central banks of Indonesia,
Japan and Singapore had helped to ease currency jitters in
Indonesia.
They said the intervention was effective in preventing the
crisis in Indonesia's currency from spreading to other financial
markets in the world.
"I think the IMF has made Indonesia a model for other Asian
countries in the way it handles its economy from deteriorating,"
a dealer said.
The monetary authorities of Indonesia, Japan and Singapore
stepped into the Singaporean foreign exchange market Monday to
prop up the Indonesia rupiah by selling a large amount of U.S.
dollars.
The rupiah, severely hit by the domino effect of the Thai baht
devaluation in early July, has lost almost 30 percent of its
value against the greenback.
The rupiah fell to a historic low of 3,850 on Oct. 6, just two
days before the Indonesian government announced its plan to seek
financial assistance from the International Monetary Fund (IMF).
The IMF and other multilateral institutions agreed last week
to provide US$23 billion in aid to Indonesia to help restore
market confidence in its economy.
Currency dealers also attributed yesterday's firming rupiah to
tight liquidity in the market, which prevented people from making
speculative attacks on the rupiah.
However, the stabilizing rupiah failed to send a positive
sentiment to share prices on the Jakarta Stock Exchange (JSX) as
the main price index ended 1.4 percent lower, or 6.86 points, to
494.84 yesterday.
Total turnover was 354.6 million shares in the regular market
valued at Rp 450.5 billion (US$138.61 million) yesterday.
A director at Asian Development Securities, Naotake Ikeda,
said that domestic and foreign investors stayed away from the
market as trading activities lacked direction.
"I think investors have realized the significance of the
government reform package, but they do not find any clear
direction in the short term," he said.
"Investors are still concerned about measures to be taken by
the government to help stabilize the economy," he said.
An equity manager of HSBC Securities Indonesia, Phua Kok Kim,
said investors were still cautious about banking stocks and the
banking system in general in the face of the liquidation of 16
banks.
He said news of businesspeople who wanted to sue the minister
of finance over the closure of their banks had made foreign
investors apprehensive about the future of the country's economy.
"I think the move was to test the strength of the central bank
against these politically well-connected businesspeople," he
said.
The government announced last week the closure of 16 insolvent
banks, including Bank Andromeda, Bank Jakarta and Bank Industri,
which are controlled or partly owned by businesspeople with
powerful political connections.
Bank Andromeda is 50 percent owned by timber tycoon Prajogo
Pengestu and 25 percent, respectively, by Bambang Trihatmojo, the
second son of President Soeharto, and Hendry Pribadi, of the
Nawan Panduta (Napan) group.
While Bank Jakarta is owned by President Soeharto's half-
brother Probosutejo and Bank Industri is 60 percent owned by the
Pension Fund Foundation of Bank Rakyat Indonesia, 24 percent by
Herry Widjaja, 8 percent by Mrs. Siti Hediati Prabowo, daughter
of President Soeharto, 2.4 percent by Okie R. Lukita and 1.6
percent by The Tje Min.
The disclosure of the 16 ailing banks were reported to have
sparked bank runs in several cities. Some banks were also
reported to have limited the amount of funds which could be
withdrawn by each depositor.
Depositors of several banks in Jakarta complained that they
were only allowed to get as much as Rp 500,000 of their
funds. (aly)
JAKARTA (JP): The rupiah continued to stabilize against the
U.S. dollar yesterday to close at 3,250/70 in comparison to the
opening of 3,200/30 in the morning session after Bank Indonesia,
the central bank, stepped in the market several times.
"The central bank was seen in the market selling dollars when
the rupiah was at 3,210 and 3,240," a chief dealer with a private
bank said.
The dealer could not confirm the amount of dollars sold.
Dealers said swap rates increased in both domestic and
offshore markets on fears of tight rupiah liquidity following
concerted intervention by three central banks on Monday.
"The persistent intervention by the central banks was likely
aimed at bringing the rupiah to below 3,000," a dealer said.
Dealers said intervention by the central banks of Indonesia,
Japan and Singapore had helped to ease currency jitters in
Indonesia.
They said the intervention was effective in preventing the
crisis in Indonesia's currency from spreading to other financial
markets in the world.
"I think the IMF has made Indonesia a model for other Asian
countries in the way it handles its economy from deteriorating,"
a dealer said.
The monetary authorities of Indonesia, Japan and Singapore
stepped into the Singaporean foreign exchange market Monday to
prop up the Indonesia rupiah by selling a large amount of U.S.
dollars.
The rupiah, severely hit by the domino effect of the Thai baht
devaluation in early July, has lost almost 30 percent of its
value against the greenback.
The rupiah fell to a historic low of 3,850 on Oct. 6, just two
days before the Indonesian government announced its plan to seek
financial assistance from the International Monetary Fund (IMF).
The IMF and other multilateral institutions agreed last week
to provide US$23 billion in aid to Indonesia to help restore
market confidence in its economy.
Currency dealers also attributed yesterday's firming rupiah to
tight liquidity in the market, which prevented people from making
speculative attacks on the rupiah.
However, the stabilizing rupiah failed to send a positive
sentiment to share prices on the Jakarta Stock Exchange (JSX) as
the main price index ended 1.4 percent lower, or 6.86 points, to
494.84 yesterday.
Total turnover was 354.6 million shares in the regular market
valued at Rp 450.5 billion (US$138.61 million) yesterday.
A director at Asian Development Securities, Naotake Ikeda,
said that domestic and foreign investors stayed away from the
market as trading activities lacked direction.
"I think investors have realized the significance of the
government reform package, but they do not find any clear
direction in the short term," he said.
"Investors are still concerned about measures to be taken by
the government to help stabilize the economy," he said.
An equity manager of HSBC Securities Indonesia, Phua Kok Kim,
said investors were still cautious about banking stocks and the
banking system in general in the face of the liquidation of 16
banks.
He said news of businesspeople who wanted to sue the minister
of finance over the closure of their banks had made foreign
investors apprehensive about the future of the country's economy.
"I think the move was to test the strength of the central bank
against these politically well-connected businesspeople," he
said.
The government announced last week the closure of 16 insolvent
banks, including Bank Andromeda, Bank Jakarta and Bank Industri,
which are controlled or partly owned by businesspeople with
powerful political connections.
Bank Andromeda is 50 percent owned by timber tycoon Prajogo
Pengestu and 25 percent, respectively, by Bambang Trihatmojo, the
second son of President Soeharto, and Hendry Pribadi, of the
Nawan Panduta (Napan) group.
While Bank Jakarta is owned by President Soeharto's half-
brother Probosutejo and Bank Industri is 60 percent owned by the
Pension Fund Foundation of Bank Rakyat Indonesia, 24 percent by
Herry Widjaja, 8 percent by Mrs. Siti Hediati Prabowo, daughter
of President Soeharto, 2.4 percent by Okie R. Lukita and 1.6
percent by The Tje Min.
The disclosure of the 16 ailing banks were reported to have
sparked bank runs in several cities. Some banks were also
reported to have limited the amount of funds which could be
withdrawn by each depositor.
Depositors of several banks in Jakarta complained that they
were only allowed to get as much as Rp 500,000 of their
funds. (aly)