Rupiah strengthens against U.S. dollar
Rupiah strengthens against U.S. dollar
JAKARTA (JP): The rupiah strengthened impressively yesterday
closing at its highest level in a month at 8,700 against the U.S
dollar due to renewed confidence in the country's economy.
Currency dealers said the market shrugged off local newspaper
reports of sporadic riots in several towns in East Java and
Sulawesi.
The dealers said Singapore Prime Minister Goh Chok Tong's
proposal to help Indonesia settle its import financing problems
created new optimism in the country's economy.
Goh proposed Tuesday the establishment of a multilateral
committee to guarantee letters of credit (L/Cs) issued by
Indonesian banks to help Indonesia finance vital imports.
Indonesian importers have complained the past few weeks that
foreign banks are reluctant to take L/Cs issued by Indonesian
banks fearing the latter are unable to service their commitments.
"The Singapore Prime Minister's proposal created a new
optimism over the country's ailing economy," one dealer said.
"This prompted dollar selling by local and overseas funds.
This is the main factor for the strengthening of the rupiah," he
added.
Dealers said the rupiah's surge was also due to the central
bank repeatedly intervening.
"But we have no confirmed details on the amounts of
intervention by the central bank," another dealer said.
Spot rupiah closed at 8,700/9,000 against the American dollar
from its opening at 9,900/10,200.
The rupiah closed at 9,900/10,200 against the American dollar
the previous day.
"The rupiah maintained its upward trend against the U.S.
dollar for the whole trading day, though trading volume remained
thin," a dealer said.
Most currency dealers expected the government would make new
financial moves in the near future to further bring the rupiah
closer to the 5,000 mark, the exchange rate used by the
government in calculating the 1998/1999 fiscal year budget
beginning in April.
The rupiah hit an all-time low of 17,000 against the American
dollar in early January due to mounting fears that Indonesian
corporations could not pay their huge overseas debts.
As the rupiah strengthened, stock prices on the Jakarta Stock
Exchange (JSX) declined 3.14 percent on persistent profit taking
for the second consecutive day in a correction of Monday's gains,
brokers said.
The JSX Composite Price Index dropped 16.86 points to 519.92
points from 536.79 the previous day with a total turnover of
759.73 million shares on the regular market valued at Rp 687.19
billion (US$78.98 million).
Stockbrokers said market sentiment remained negative for the
whole trading day yesterday as most foreign investors focussed on
profit taking on bellwether stocks like PT Telkom and PT Indosat.
"Profit taking by foreign investors dominated trading
activities in the bourse yesterday," a broker with a joint-
venture securities said. (aly)