Rupiah stable as regional currencies gain footing

JAKARTA (JP): The rupiah stabilized yesterday against the U.S. dollar as regional currencies gained footing on the back of a recovery in the world's major stock markets.

Foreign exchange dealers said the rupiah was stable against the greenback closing at 3,630/40 compared to the opening of 3,620/45 in the morning trade session.

A local bank chief dealer said Bank Indonesia (the central bank) was seen guarding the rupiah, as it sold a limited amount of dollars in the market yesterday.

"The central bank continues to regularly intervene in the market by selling a limited amount of dollars," the dealer said.

Currency dealers said the foreign exchange market saw little trading activity because most investors were still waiting for details of the IMF-led financial assistance for Indonesia.

They said President Soeharto's statement that Singapore would provide US$10 billion to help Indonesia during the currency crisis did not have any significant impact on restoring investors' confidence in the country's currency and stock markets.

Most Asian currencies also perked up as regional stock markets erased some of their spectacular losses after Wall Street soared overnight.

The Singaporean dollar was at 1.5740/60 to the U.S. dollar after hitting a low of 1.5870 against 1.5780/95 late Tuesday.

"We saw continued buying (of U.S. dollars) after we cleanly broke through 1.5800. That was some resistance I thought would hold," a U.S. treasury manager told AFP.

The Malaysian ringgit traded sluggishly, firming to 3.3900/00 against 3.4150/250 Tuesday.

The Thai baht looked soft, particularly in onshore markets where it hit a low of 39.60 to the dollar amid uncertainty over the implementation of financial reforms.

"I think ... we're still looking to see the baht head to the 40s," said a regional currencies trader at a European firm in Singapore.

The Philippine peso firmed to 34.82 to the dollar against Tuesday's close of 35.15 after central bank governor Gabriel Singson said Tuesday that he had asked banks not to speculate on the peso.

The South Korean won ended at another historic low of 964.00 to the dollar and was only kept from diving further by its 2.25- percent trading band.

The Hong Kong dollar firmed a notch Tuesday to 7.7285/95 to the U.S. dollar against 7.7310/50. Interbank interest rates eased as the Hong Kong Monetary Authority added liquidity to the system, offering three-month funds at 13 percent.

Even the Australian dollar made a bid for recovery, firming to US$0.7050/57 from Tuesday's close of $0.6923/28, as Wall Street's rebound reinforced earlier demand from exporters and U.S. funds.

As the rupiah stabilized, shares prices on the Jakarta Stock Exchange (JSX) closed 5.37 percent higher yesterday following the strengthening of the Wall Street and the Hong Kong stock exchanges, stock brokers said.

The JSX composite index, the main price indicator on the JSX, closed 24.06 points higher to 472.05 as most investors bought back cheap quality stocks.

Brokers said gainers outnumbered losers 101 to 24 with 48 stocks unchanged.

Brokers said that most blue chips made big gains yesterday after recording a sharp 8.59-percent plunge Tuesday triggered by panic selling in most big capitalized stocks by foreign and local investors.

However, David P. O'Neil of Lippo Securities said yesterday's increase in the Jakarta stock market was just a technical rebound following the strengthening of Wall Street and Hong Kong stocks.

He said the stock market would find it difficult to sustain yesterday's gains for the rest of the week.

"The overall atmosphere will still be volatile for the stock market in the coming weeks," he said.

Mohammad Syahrial, head of research at Pentasena Securities, said share prices on the JSX would still decline in the coming weeks due to the absence of market confidence.

"If large big cap stocks don't recover, there's a strong possibility that the index might break 415 points in the coming days," he said.

The lowest level of the index was in April 1995 when it hit 416.45, he said. (aly)