Rupiah, stocks follow on regional weakness

JAKARTA (JP): The rupiah and stock prices weakened yesterday following general weakness in the region, dealers and stock brokers said.

The rupiah was moving in tandem with the region, with spot rupiah closing at 2,935/38 against the U.S. dollar from an opening of 2,900/15 after two days of stability at the 2,900 level.

Foreign exchange dealers said general weakness in regional currencies had affected the rupiah. Rupiah even touched its lowest level at 2,944 yesterday.

The dealers said the rupiah was moving toward stability as the trading band had narrowed to three points at yesterday's close.

They said the rupiah was already relatively stable, trading at about 2,900. The currency would continue to be stable in the short-term as local appetite for dollar was easing.

One dealer at a state bank said that offshore players, especially those from Singapore, still dictated the market by selling dollars to get rupiah to pay back their rupiah obligations they absorbed last month.

"Local players absorb all dollars unlocked by Singapore. They are building a long position on dollar, forcing the rupiah to weaken," he said.

But the volume was thin as the market was still quite, so the quoted prices were a bit exaggerated, he said.

He added that market liquidity remained tight, with overnight money rising to 40 percent from 30 percent to 35 percent in the morning.

Overnight swap rose to 1.2/1.3 from 0.8 points and tomorrow/next to 1.7/2.0.

One-month swap rose to 48/53 from 43/45, two to 85/90 from 70/85, three to 110/125 from 95/115, six to 210/220 from 200/210 and one-year to 365/400 from 340/360 points.

Stocks

Stock prices on the Jakarta Stock Exchange dropped 3.84 percent, with the composite index falling 22.988 points to close at 575.016.

Turnover totaled 402.7 million shares valued at Rp 498.379 billion (US$170 million).

Stock analysts said yesterday's drop was driven by continuing local-led selling of blue chips amid generally weak regional markets.

An analyst at one local securities house said most players gained profit as they expected few strong positive surprises in the short-term following the central bank's interest rate cut.

"They are trying to make profit every trading day to cover their losses in the last few weeks," he said.

Selling was dominated by foreign investors, as concerns remained on the economic slowdown amid high interest rates and on exchange rate uncertainty, he added.

He predicted the market would remain volatile in the short- term as players waited for more details on the precise impact of the rupiah's sharp depreciation against the dollar on corporate earnings. (rid)