Rupiah, stocks suffer on political woes
JAKARTA (JP): Indonesia's rattled financial markets shuddered again on Thursday with the rupiah sinking below 12,000 to the U.S. dollar on the back of escalating political tension at home, currency dealers said.
Stock prices also suffered, although the main price index rose slightly.
The crippled rupiah, which opened at 11,700/11,800, dipped to an intraday low of 12,100 in the morning before recouping to 11,950/12,050 at the close of trading due to dollar-unloading by state banks.
Thursday's close was 1.6 percent lower than the Wednesday close of 11,800.
"Since political stability has not been restored yet, a small student rally will certainly kill the financial market," a chief dealer with a local private bank said.
News reports said that hundreds of students staged a noisy demonstration next to Merdeka Palace on Thursday demanding President B.J. Habibie step down and lower prices of basic commodities.
Thursday's peaceful rally was the latest by students over escalating prices and Habibie's failure to arrest the country's deteriorating economic crisis.
Dealers said that even though the state-banks continued to unload dollars for rupiah on the foreign exchange market, they failed to prevent the rupiah from falling against the American dollar.
"The amount of market intervention is small compared to dollar demand by offshore operators," the dealer said pointing out that overseas operators, especially Singaporeans, put in bulk dollar buying orders to take the advantage of political instability at home.
Stock prices on the Jakarta Stock Exchange (JSX) also fell on escalating worries over the domestic political situation although the main price index rose firmed slightly on the back of massive buying of cementmaker PT Semen Gresik.
The JSX Composite Index rose 1.50 points to 327.27 on a total turnover of 215.72 million shares changing hands valued at Rp 241.36 billion (US$20.11 million).
Dealers said investors speculatively bought shares in state- owned Semen Gresik following a statement from the government that it would like to raise its share price by 200 percent.
"Positive news on Semen Gresik helped revive the sentiment in the local market," Andre Cita, associate director of Bahana Securities, said.
He said renewed positive sentiment like this, despite several reports of student demonstrations, prevented stock prices from slumping further.
"If students stage a peaceful rally like this, foreign investors will not be so scared," he said pointing out that the violent rally on Monday prompted foreign investors to shun the bruised local market.
Other stockbrokers said the market, however, remained cautious as fears of more antigovernment protests hadn't faded while reports of rioting had rocked several major cities in the country.
"Foreign investors who had long left our market do not have any plans in the short term to come back," another broker with Mashill Jaya Securities said.
Semen Gresik rose Rp 1,200 to Rp 8,075 on 3.43 million shares changing hands while PT Telekomunikasi Indonesia, which accounts for 17 percent of the total market capitalization, rose Rp 75 to Rp 2,150 on 2.75 million shares traded. (aly)