Rupiah stable but stock prices slide
JAKARTA (JP): The rupiah was stable yesterday against the U.S. dollar, but stock prices weakened in a thin market, dealers and brokers said.
Currency dealers said trading remained slow and thin throughout the day, with the rupiah gaining some strength from a calmer regional market.
Spot rupiah closed at 2,967/2,972 against the U.S. greenback, compared with an opening of 2,963/2,968 and Wednesday's close of 2,982.
One local bank dealer said there was no major movement in the market and trading ranged between 2,960 and 2,975.
"Nothing happened today. The market was again very quite. We have just been playing around the whole day and not really trading," the dealer said.
Stockbrokers said the Jakarta Stock Exchange was also calm yesterday, with most investors staying on the sidelines.
Other investors continued to unload their stock holding, forcing the composite index to end down 2.46 points at 524.27.
Estimated turnover was 234.9 million shares worth Rp 293.5 billion (US$98.5 million), compared with the normal daily trading volume of Rp 500 billion.
Head of research at Socgen Crosby Securities, Goei Siauw Hong, said most foreign investors had long stayed out of the market due to regional bearish sentiments.
"The market will show a downward trend in coming weeks because most companies have suffered losses from the rupiah depreciation," he said.
"This will affect the country's economy in the long run. Therefore, it is better for investors to stay out of the market now though some stocks are cheap," Goei said.
He said the government had tried its best to soften the effect of the currency crisis by lifting foreign stock ownership barriers, reducing interest rates and rescheduling mega projects.
"But such measures were designed only for the short- and medium-term, not for the long term," Goei said.
He said investors expected the government to take further steps to deal with various inefficiencies in the economy.
If the government moved forward with other reforms, Goei predicted, the rupiah would stabilize and the stock market would recover in six months.
Currency dealers said the rupiah was still dependent on regional trends.
The rupiah opened lower yesterday, compared with Wednesday's close, due to overnight rises in overseas markets, especially New York, dealers said.
But strong domestic corporate demand for dollars limited the rupiah strengthening, they said.
They added that liquidity improved further yesterday, with overnight money falling to 16 percent in the afternoon from between 25 percent and 28 percent in the morning.
Relaxed money market conditions and further anticipation of lower interest rates capped the forward market, they said.
Overnight swap was at 0.9/1.0 and tom/next at 2.0/2.5.
One-week swap was at 6/7, one-month at 32/35, two at 62/72, three at 95/105, six at 195/205 and one-year at 365/395 points. (aly/rid)