Rupiah stabilizes against U.S. dollar, stocks firm

JAKARTA (JP): The rupiah continued to stabilize against the U.S. dollar withstanding regional pressure, currency dealers said yesterday.

Meanwhile, stock dealers said local stock prices ended slightly lower as investors were waiting for the results of talks between the International Monetary Fund (IMF) and the Indonesian government for financial assistance.

Foreign exchange dealers said the rupiah was traded in a narrow range between 3,560 and 3,585 against the greenback in very small volume.

Spot rupiah closed at 3,560/70 yesterday, against the opening of 3,560/90 and Friday's close of 3,575/80.

"Trading turnover was practically thin, and the rupiah was unmoved," a local bank chief dealer said.

Currency dealers said the central bank was seen in the market yesterday in an apparent move to prevent the rupiah from falling like other regional currencies.

News on the visit by Malaysian Deputy Prime Minister Anwar Ibrahim, who pledged to provide US$1 billion in financial aid to Indonesia, helped stabilize the rupiah, dealers said.

Nevertheless, the market was still waiting for the IMF package, they said.

Some analysts and economists in Jakarta have speculated that financial aid from the IMF package would be attached to some conditions.

They may include a series of reforms like the liquidation of insolvent banks and the abolition of state-agency Bulog's monopoly over key commodities and some 'sensitive' key industries.

But reports that Bank Indonesia would liquidate some insolvent banks had increased suspicions among currency traders.

"Large private banks have not wanted any foreign exchange transactions with smaller ones since Friday. And some joint venture banks have again cut ties with local private banks," a dealer said.

"It is therefore important for Bank Indonesia to immediately announce the names of banks to be liquidated," he said.

As the rupiah stabilized, stock prices on the Jakarta Stock Exchange (JSX) ended 0.29 points lower to close at 490.11.

About 278.04 million shares changed hands in the regular market worth Rp 296.1 billion ($84.62 million).

Stock brokers said investors made some selective buying of second-line stocks.

Securities brokers said the regional fall of stocks, especially in Hong Kong, did not have a significant impact on trading activities at the JSX.

"Since people are focussing their attention on the IMF talks, the regional fall has had a trivial impact in the Jakarta market," an analyst with Pentasenta Securities said. (aly)