Rupiah steady despite govt's bank suspensions

JAKARTA (JP): The rupiah remained steady yesterday but share prices on the Jakarta Stock Exchange (JSX) tumbled 2.7 percent following the government's latest move to restructure the country's shattered banking system.

Currency dealers and stock brokers said the persistent volatility in the regional market, especially the weakening Japanese yen, also adversely affected domestic market sentiment.

Dealers said rupiah opened lower at 11,900 following market talks that the government would take action against troubled banks under the supervision of the Indonesian Bank Restructuring Agency.

They said such news prompted most operators to take positions to purchase dollars in anticipation of another massive run on deposits in the country's banking system.

"Some operators started to buy dollars again after hearing news that the government would suspend some problem banks," a chief dealer with a local private bank said.

The rupiah closed at 11,800 against the American dollar yesterday, compared to its close at 11,700 the previous day.

The government moved yesterday to suspend the operation of Bank Dagang Nasional Indonesia, Bank Modern and Bank Umum Nasional in an effort to reassure international investors of the government's commitment to clean up the country's ailing banking system.

The government is also to take over the shareholdings of Bank Danamon, Bank PDFCI, Bank Tiara Asia and Bank Central Asia.

All those banks, except Bank Central Asia, are listed on the JSX.

Trading in the six banks was suspended yesterday.

Following the suspension, local stock prices fell sharply. The JSX Composite Index ended 10.98 points lower to close at 388.34.

Trading turnover totaled 206.98 million shares changing hands valued at Rp 292.57 billion (US$25.29 million).

Losers outpaced gainers 60 to 18 with 86 stocks unchanged.

Associate director of state-owned securities house Bahana Securities Andre Cita said the government's backtracking on the privatization plan on cement producer PT Semen Gresik had killed investors' positive sentiment in state companies.

"Foreign investors interest on the privatization of Semen Gresik had declined after learning the backtracking ... and this negative sentiment continue to extend to other state companies," he said.

The government confirmed Thursday it would retain a majority stake in Semen Gresik and it would divest only 14 percent of its shares in the cement maker, instead of selling 35 percent announced earlier.

"Inconsistencies like this will not be bad for the state companies but instead will hammer our market even harder," a broker with Trimegah Securindo Lestari said.

Brokers attributed the sharp fall in stock prices to massive selling of Semen Gresik and state-telecommunication provider PT Telkom and other state-owned companies like tin mining firm PT Tambang Timah and gold and nickel producer PT Aneka Tambang.

Semen Gresik fell Rp 1,975 to Rp 6,775 on 4.11 million shares while market leader Telkom shed Rp 125 to Rp 2,950 on 10.87 million shares.

Aneka Tambang slid Rp 150 to Rp 1,925 on 30.25 million shares traded and Tambang Timah fell Rp 525 to Rp 6,400 on 276,000 shares. (aly)