Rupiah still under pressure while shares climb 0.6%

Rupiah still under pressure while shares climb 0.6%

JAKARTA (JP): The rupiah remained weak at 14,500 yesterday
while stock prices on the Jakarta Stock Exchange (JSX) edged up
0.6 percent on reports of a possible International Monetary Fund
(IMF) bailout disbursement, dealers and stockbrokers said.

They said market sentiment was generally improving following a
statement from Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasasmita over the weekend that the
government would sign a new letter of intent with the IMF this
week.

"The market is generally positive at the news. It is reflected
by a steady rupiah and an improving composite stocks index.
However, in the longer term, uncertainty remains," a stockbroker
said.

The JSX composite index closed up 2.426 points at 423.085.
Turnover totaled 166.2 million shares valued at Rp 151.8 billion
(US$10.3 million).

Currency dealers said trading in the rupiah was very thin and
the currency was hovering around 14,500 all day against the U.S.
dollar. It ended at 14,500/650, compared to Friday's close of
14,100.

They said strong dollar demand by local commercial banks to
settle their foreign exchange debts and trade finance arrears
continued to exert downward pressure on the currency.

In addition, rumors circulating the market did not help the
currency amid the heightening political tension.

"Most investors are reluctant to unload dollars because rumors
about possible rioting tomorrow (today) are getting louder in the
market," a currency dealer with a local foreign exchange bank
said.

Labor leader Muchtar Pakpahan has warned that he plans to
bring about 10,000 workers out onto the streets of Jakarta today
to demand President B.J. Habibie relinquish his powers to a
transitional government.

But Jakarta Military Commander Maj. Gen. Sjafrie Syamsuddin
said his troops would crack down on workers staging street
protests.

Currency dealers said the fear that protests against the
government might again escalate into violence kept the rupiah
weak yesterday.

Securities analysts also warned that positive sentiment could
easily be overrun by domestic factors, especially continuing
political infighting.

Bahana Securities' associate director and head of equity sales
Andre Cita said that the improving local benchmark stock price
index did not represent improving sentiment as most investors
remained on the sidelines.

"It does not really represent improving sentiment because
there are a lot of uncertainties. And the uncertainties will
continue to dominate the market until there is a big move on the
economic front," He said.

He described the negotiations between the government and the
IMF was heading toward "uncharted territory" not imagined before,
and they needed a lot of technical inputs to draft policies to
help drag the country away from the economic abyss.

However, Cita said that there were more hopes and
opportunities now than a few months ago when Soeharto was still
in power, and suggested that investors grab opportunities by
picking up quality stocks.

A broker with a joint venture securities house said stock
trading was virtually meaningless with its thin volume, but
selective buying in several large-cap stocks like state-owned
telephone firms Telkom and Indosat helped shore up trading.

Besides, increased trading in prospective firms with dollar
revenues like Indah Kiat and Tjiwi Kimia also helped market
standing.

Telkom closed Rp 100 higher at Rp 3,900, Indosat jumped Rp 200
to Rp 15,700, Tjiwi Kimia rose Rp 50 to Rp 1,475 and Indah Kiat
rose Rp 150 to Rp 2,575. (rid)