Rupiah, stocks gain footing in thin trade
Rupiah, stocks gain footing in thin trade
JAKARTA (JP): The rupiah and share prices continued to gain a
footing in thin trade as currency operators and stock investors
benefited from the upbeat momentum resulting from the
government's new economic measures.
The spot rupiah ended firmer at 9,850/10,800 against the U.S.
dollar in Jakarta compared to an opening of 10,500/11,500 in the
morning.
Stock prices on the Jakarta Stock Exchange (JSX) also felt the
fruits of the government's latest reforms, with the main price
index surging 2 percent.
At its current level, the rupiah has lost 78 percent of its
value against the dollar from its previous rate of 2,450 in early
July last year.
The rupiah had a bright performance on Tuesday when it managed
to strengthen to 10,900/11,300 from 13,500/14,500 a day earlier
following the government's new economic measures.
"I think the improved sentiment in the rupiah was strongly
supported by the announcement of the bold banking measures
Tuesday," a chief dealer with a local private bank said.
The government announced Tuesday the latest package of banking
reforms, including government guarantees for depositors and
creditors of the country's commercial banks, the establishment of
a new institution, the Indonesian Bank Restructuring Agency, and
the appointment of Radius Prawiro by President Soeharto to
negotiate a resolution on Indonesia's crippling mountain of
corporate debt to temporarily halt servicing corporate debt.
Dealers said the rupiah's movement did not really reflect the
real conditions of the market, given the light volume of trading.
"I do not see any significant transactions in the market
yesterday as main players in the region have been on holiday,"
the dealer said.
Financial markets in Hong Kong, Kuala Lumpur, Seoul, Shanghai,
Singapore and Taipei were closed yesterday to celebrate the start
of the Year of the Tiger on the Chinese calendar.
The holiday mood will likely continue until next week as most
financial markets in the region will be closed today and tomorrow
for Idul Fitri, marking the end of the Moslem fasting month of
Ramadhan.
There will be no central bank clearing in Jakarta today and
the stock market will also be closed today and Friday.
The foreign exchange and stock markets will resume trading
again on Monday, Feb. 2.
Dealers and brokers said business activities would slow down
prior to Idul Fitri festivities.
"It's common to see the slowdown of economic activities prior
to Lebaran," a dealer with a private bank said.
But currency dealers were still cautious whether the rupiah
would be able to maintain its upward movement because its surge
in the last few days took place in the absence of big players
from Singapore and Hong Kong.
"Let's just wait and see how the rupiah moves next week when
Singapore and Hong Kong players are back in the market again," a
dealer with a local private bank said.
"The direction of the rupiah has been dictated largely by
Singapore and Hong Kong operators so far," the dealer said.
The rupiah hit an all-time low of 17,000 against the greenback
early this month on increasing worries over Indonesia's private
sector debt.
Indonesia has a total external debt of US$140 billion as of
the end of 1997 with the corporate sector accounting for about
$66 billion.
Stock prices on the JSX rose higher with the main price index
rising 9.62 points to close at 488.93 from 476.31 the previous
day.
Over 282.94 million shares changed hands in the regular market
valued at Rp 449.66 billion ($44.96 million) yesterday.
Stock brokers said local investors made massive buys in
banking stocks due to the government's guarantee for bank
depositors and creditors on their problems.
"Positive sentiment in banking stocks helped the benchmark
price index rise on support of the government's recent reforms,"
a broker with a local brokerage house said.
Elsewhere, most Asia-Pacific stock markets ended trading with
modest gains as several major regional bourses were shutdown for
the Chinese New Year holiday. (aly)