Rupiah stays put but stocks up 2.38 percent on bullish sentiment

JAKARTA (JP): The rupiah ended unchanged at 7,450 against the U.S. dollar in thin trading on Wednesday but stock prices gained ground to close 2.38 percent higher.

Currency dealers said market participants were almost absent from the local currency market, leaving the rupiah to be traded in the very narrow range between 7,400 and 7,550.

"The market is dull, there are almost no trading activities as most operators have stayed clear of the market," a chief dealer with a local private bank said.

The rupiah remained steady at the 7,000 level against the greenback despite reports of increasing antigovernment protests.

About 1,000 university students took to the streets again on Wednesday in three separate rallies near the military headquarters building, the Attorney General's Office and the residence of former president Soeharto, who was toppled following the bloody riots in May this year.

Students have stepped up protests near Soeharto's house on Jl. Cendana in Central Jakarta in the past few days to demand that he be prosecuted for his alleged abuse of power in the past three decades.

Currency dealers said market participants, who in past months took advantage of the country's political and social uncertainty to attack the rupiah, steered clear of the market again on Wednesday.

"Most market participants do not want to build any new position ahead of the year-end holiday," another dealer said.

Dealers said political turmoil and violent outbreaks sweeping the country in recent weeks had failed to dampen market sentiment on the rupiah, which hit the 7,000 level early last month for the first time since January this year.

Financial analysts said the rupiah's rally was supported by falling inflation and a steady stream of bailout funds from the International Monetary Fund (IMF). Some of the funds were converted to rupiah to finance the social safety net program, thereby improving the dollar liquidity in the local money market.

Bank Indonesia Governor Sjahril Sabirin said in Hong Kong on Tuesday that the rupiah still had room to advance to 6,500 in the coming days.

"There's room for it to strengthen a bit further, to a level a little bit below 7,000 or 6,500," he said.

Taking the lead from the rupiah, stock prices on the local market edged up 2.38 percent on Wednesday, driven by the increase in telecommunication stocks which account for a 25 percent stake in the market capitalization.

The Jakarta Stock Exchange (JSX) main composite index rose 9.22 points to close at 396.96, with 291.31 million shares valued at Rp 287.78 billion (US$32.05 million) changing hands.

Gainers outnumbered losers by 76 to 19 with 77 stocks unchanged.

Stockbrokers attributed the rise in share prices to bullish sentiment in the regional market and the overnight increase on Wall Street.

"The increase in share prices tend to benefit from bullish sentiment in other regional markets," said Vonny Juwono, a sales broker with Trimegah Securindolestari.

She said that investors remained concerned that escalating student demonstrations, and the fear they could be more tumultuous in the coming days, would weigh down market sentiment in the already beleaguered bourse.

However, some foreign brokerage firms including ING Barings Securities, ABN Amro and GK Goh Ometraco placed more buying orders while Jardine Fleming Nusantara, Merrill Lynch Indonesia and Credit Lyonnais Capital Indonesia continued to discard stocks they bought on previous days, she said.

"At least we are still seeing some foreign investors entering the market," Vonny said.

Telecommunications firm PT Telkom rose Rp 125 to Rp 2,825 on 15.95 million shares changing hands, pulp and paper company Tjiwi Kimia climbed Rp 75 to Rp 1,775 on 11.66 million shares, car manufacturer Astra International rose Rp 50 to Rp 1,075 on 14.46 million shares and Indosat accrued Rp 450 to close at Rp 11,200 on 1.02 million shares changing hands. (aly)