Rupiah stabilizes as BI steps in
JAKARTA (JP): The rupiah dropped to the 3,685 level in the morning but managed to gain ground to stabilize at 3,620/40 against the opening of 3,600/50 due to the central bank's intervention, currency dealers said.
"Bank Indonesia was seen in the market twice but there were no reports about the amount of dollars sold," one local bank chief dealer said.
Foreign exchange dealers claimed that such interventions were useful to prevent the rupiah from surpassing the 3,700 level.
"Though intervention is not so efficient, it prevented the rupiah to surpass the 3,700 level," said one dealer.
Most currency dealers said that trading activity in the currency market was relatively slow yesterday as most people were still waiting for the details of the IMF-led financial package for Indonesia.
"The market is slow because there is no good news for the rupiah as most people were waiting for the details of the financial package from IMF," one local bank chief dealer said.
The IMF-led team is in Jakarta to discuss the financial package to restore market confidence in Indonesia.
IMF Managing Director Michel Camdessus said yesterday that IMF talks with Indonesia were extremely constructive and that he hoped for an important deal soon.
"On Indonesia, we have a mission negotiating in Jakarta. What I hear from the negotiations is that they are evolving in an extremely constructive climate," he told Reuters in Paris.
Dealers said Bank Indonesia's move to cut the interest rates on short-term papers (SBIs) by 100 basis points did not boost market sentiment.
The lackluster trading activity in the currency market also affected trading on the Jakarta Stock Exchange (JSX) with the main price gauge slipping 1.2 percent or 6.51 points to 514.17 yesterday.
Total turnover was 246.11 million shares changing hands on the regular market valued at Rp 264.46 billion (US$75.56 million) yesterday.
Securities brokers said that the decline was partly caused by a lack of confidence in the rupiah's stability and the failure of a central bank interest rate cut to bolster sentiment.
"The SBIs rate cut did not help boost trading activity in the currency and stock markets because it was only one percent," an analyst with Harita Securities said.
Harry Danardojo, managing sales director of Lippo Securities, said yesterday that most foreign investors tracked sidelines because they were waiting for the announcement of the full financial package from the IMF in the face of the country's currency woes.
"Most investors are now waiting for the announcement of the IMF-led financial package and the currency to stabilize," he said.
Harry said most foreign investors viewed that the rupiah depreciation against the U.S. dollar was the key factor for most foreign investors to stay out of the stock market for the time being.
A securities analyst said that trading activities on the JSX was slow yesterday marked by major sell-offs of big capitalized stocks like Telkom, HM Sampoerna, Gudang Garam and Bank Internasional Indonesia. (aly)