Rupiah, stocks gain over regional strength
JAKARTA (JP): Indonesia's financial markets gained ground on Wednesday as they tracked the rise of regional markets, currency dealers and stockbrokers said.
They said the rupiah continued to sustain gains in moderate dealing against the U.S. dollar and stock prices rose 1.1 percent,
Currency dealers said the rupiah, which opened at 10,900/11,000 against the dollar, traded above the 11,000 level for the whole trading day and closed at 10,800/10,900.
Dealers attributed the rupiah's extended gain to the rise of other currencies in the region and persistent dollar-selling by certain state banks.
"Besides the rise of regional markets, persistent dollar- selling by state banks was responsible for the strong rupiah," a chief dealer with a local private bank said.
He said state banks sold between US$10 million and $20 million in the market.
Dealers said the rupiah could strengthen to 10,500 provided the rioting in Aceh did not spill over into other provinces in the next few days.
Like the rupiah, stock prices on the Jakarta Stock Exchange (JSX) also gained after weeks of continuing losses.
The JSX Composite Index rose 3.77 points to 329.62 on a total turnover of 279.46 million shares valued at Rp 254.49 billion (US$23.52 million) changing hands.
Gainers outpaced losers 48 to 46 with 76 shares unchanged.
Stockbrokers said the rise in the price index was driven by foreign investors buying dual-listed stocks, which were considered oversold.
"But I suspect this rise will not last long as various political issues are still unresolved," an institutional broker with Trimegah Securindo Lestari said.
The research head of Mashill Jaya Securities, Edhi Widjojo, said investors had not found any good reasons to stay in the country's battered market.
"There are no more long-term investors in the local market, most of the players are short-term traders who base their investments on sentiment rather than on fundamentals,"
He said political and social uncertainty at home and higher interest rates in the banking sector had made many long-term investors shun the local equity market.
Bank Indonesia said Wednesday the weighted average interest rate of the auction of its one-month paper stood at 70.58 percent per annum, up from 70.44 percent last week.
"With no positive news in the bruised local market, most investors prefer to put their funds in the money market,' Mashill's Edhi said.
Despite selective buying on dual-listed stocks, stockbrokers said most investors still continued to discard middle and small sized stocks out of fear that they would be declared bankrupt by their creditors in the coming months.
Market leader state-owned domestic telecommunications firm PT Telkom, which accounts for 17 percent of total market capitalization on the local bourse, rose Rp 175 to Rp 2,200 on 12 million shares traded.
The Salim Group's food giant PT Indofood Sukses Makmur rose Rp 200 to Rp 1,650 on 30 million shares traded on market talk that some offshore parties, especially from Japan, might be about to acquire a significant stake in the debt-ridden instant-noodle producer. (aly)