Rupiah, stocks follow on regional weakness

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)