Rupiah stable, stocks bounce 1.6 percent

JAKARTA (JP): Indonesia's financial markets remained stable on Thursday with the rupiah closing slightly lower at 10,900 against the U.S. dollar but stocks rising 1.6 percent.

Currency dealers said the rupiah fluctuated above the 10,000 level to the U.S. dollar in moderate dealing as most market operators avoided taking long positions on the currency.

Dealers said that offshore operators, especially from Singapore, did not make any big orders because they were closely watching on the development of the Malaysia's move to control the foreign exchange trading.

"Rupiah trading is very quiet as market participants are watching the Malaysian ringgit closely," a chief dealer with a local private bank said.

The rupiah, which opened at 10,850/10,950, closed slightly lower at 10,900 against the American dollar compared to Wednesday's close of 10,850,

Dealers said the lackluster rupiah trading was suffocated by concerns about escalating social unrest triggered by soaring prices of basic commodities despite dollar selling by state banks to prop up the currency.

"We have seen state banks continue to sell dollars over the past few days but this failed to improve the rupiah's position on Thursday," the dealer said, adding the dollar selling was between US$10 million and $20 million Thursday.

Dealers said the rupiah was expected to resume its rise on Friday to break the 10,500 level.

Stocks on Jakarta Stock Exchange (JSX) rose 1.6 percent on technical buying sentiment by short-term investors on certain selective stocks which had been oversold in the past few weeks.

The JSX Composite Index rose 5.16 points to 334.78 on a 212.81 million shares valued at Rp 289.64 billion (US$26.57 million).

Gainers outpaced losers 47 to 42 with 63 shares unchanged.

Stock brokers said the bull run on certain agricultural stocks following the government's decision to scrap import duties for some basic commodities slightly improved overall buying sentiment on Thursday.

"But the slight increase is just a technical rebound after losses in the past few weeks," an institutional sales broker with Trimegah Securindo Lestari said.

Head of research at Vickers Ballas Tamara Securities Noraya Soewarno said that regional market distress coupled with the high interest rates at home posed a big dilemma for portfolio investors debating whether to enter the equity market.

"Investors prefer to put their funds in fixed income instruments which provide higher yields," she said pointing to Bank Indonesia's 70 percent auction rate for its one-month promissory notes.

Brokers said, however, that the overall sentiment remained somber as investors continued to discard second and third-line stocks.

"Even if there is buying sentiment, it is merely for the short-term ... and it does not reflect the recovery of the market," Vickers Ballas' Noraya said, pointing out that political uncertainties at home were also responsible for the sluggish market.

Trimegah's brokers said that market speculation that the instant noodle producer PT Indofood Sukses Makmur had signed a deal with a Japanese investor to acquire one of its business units had sparked massive buying orders for the stock on Thursday.

The stock price of Indofood rose Rp 375 to Rp 2,025 on a total turnover 73.71 million shares.

Plantation firm Astra Agro Lestari rose Rp 150 to Rp 1,975 on 3.83 million shares while PT London Sumatra Indonesia was up Rp 175 Rp 1,225 on 22.99 million shares changing hands. (aly)