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)