Rupiah stable, stocks up on govt moves
Rupiah stable, stocks up on govt moves
JAKARTA (JP): The Indonesian rupiah was stable in range
trading, between 3,630 and 3,650 yesterday, one day after Bank
Indonesia, the central bank, moved to improve liquidity and add a
dollar supply, dealers said.
The stable rupiah also affected trading on the Jakarta Stock
Exchange, which saw its index rise mildly by 0.2 percent,
stockbrokers said.
Currency dealers said the rupiah barely moved forward despite
measures by the government to shore up its value.
Spot rupiah closed at 3,630/40 against the U.S. dollar --
about the same level as Monday's close of 3,620/40 and
yesterday's opening of 3,630/50.
"Nevertheless, the fact that the rupiah has remained stable
despite drops in regional currencies shows that the government's
initiatives are working," one dealer said.
Dealers said most dollar supplies were still coming from
offshore players as local players were using a wait-and-see
strategy following the central bank's move on Monday.
Local banks were still reluctant to unload dollar holdings
although the central bank had allowed them to cut their foreign
exchange reserves to 3 percent from 5 percent, allowing them to
sell their excess dollar liquidity to the market.
"We are still digesting the new policy and waiting for an
official explanation from the central bank concerning this
matter. Therefore, we did not do anything to our dollar reserves
today," a private bank dealer said.
Some offshore players sold their dollars for fear of an
increased dollar supply in the currency market as a result of the
reserve requirement cut, dealers said.
Nevertheless, some offshore players were still reluctant to
supply the market with more dollars, fearing the dollar might
rise again following the easing of rupiah liquidity.
"I think those two differing factors have overwhelmed the
market. We really don't know which path operators will take," the
chief dealer said.
But he said the rupiah might continue to stabilize following
the good news from visiting Singaporean Prime Minister Goh Chok
Tong, who pledged to help Indonesia solve its currency crisis.
Minister/State Secretary Moerdiono said Singapore's planned
assistance would be financial and would be used to boost the
country's foreign exchange reserves. He gave no figures.
"Those statements are very positive and could drive up the
rupiah in coming days," the dealer said.
But securities analysts said the market still lacked
confidence despite news of Singapore's support and the
International Monetary Fund's (IMF) approaching package to
support the rupiah.
The Jakarta Stock Exchange composite index closed up 0.797
points to 514.968 points.
Transactions were estimated at 322.9 million shares worth Rp
336.2 billion (US$92.35 million).
BZW Niaga Securities trading head Adnan Tan said investors
were now sidelined ahead of a possible announcement by the IMF to
support the rupiah.
"People are still very cautious, we have not seen much foreign
buying in Indonesia," Tan said.
An IMF mission is here for talks with Indonesian officials for
an aid package to help Indonesia deal with the sharp depreciation
of the rupiah.
Tan said investors were still calculating the impact of the
devaluation on Indonesian corporations and the economy in
general.
"That is the variable people are looking at right now.
Regardless what IMF decides, that variable will not be clear in
the short term," Tan said. (rid)