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)