Rupiah strengthens an news of new loans

Rupiah strengthens an news of new loans

JAKARTA (JP): The local financial market gained ground
yesterday after the International Monetary Fund announced it was
resuming loan disbursements to the country and said an additional
US$6 billion had been added to its financial rescue package.

The rupiah jumped 7 percent to 13,200 against the U.S. dollar
yesterday, while share prices on the Jakarta Stock Exchange (JSX)
gained 1.4 percent, dealers and stockbrokers said.

"That's very positive news the market has been waiting for.
Hopefully, this momentum can be maintained so that we could
continue on to recovery," Vickers Ballas Tamara's head of
research Noraya Soewarno said.

She noted the market was bullish yesterday, with investors
taking firm buying on the local bourse.

Currency dealers said the news of the extra funding -- which
brings the total IMF package to $46 billion -- encouraged
investors to buy rupiah, assuming the currency could strengthen
further to the level of 10,000 as set by the IMF and the
government.

They said another factor driving investors was the statement
by Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita that the government planned to reschedule
its sovereign debt.

Ginandjar said the government was still working on the details
with lenders and hoped to reach a final agreement with donors at
the Consultative Group on Indonesia (CGI) meeting in Paris on
July 29 - July 30.

The rupiah, which opened above the 14,000 level, rose to
13,800 by the morning.

Dealers said stop-loss orders suddenly increased when the
rupiah was trading at 13,800, which only accelerated the rupiah's
increase.

As state banks aggressively offered the U.S. unit, dollar
bidders backed off, they said.

The rupiah rose further, breaking the resistance level of
13,000 to the day's high of 12,800 in afternoon trading before
settling at 13,200/300 at the close.

It had closed Wednesday at 14,350.

A dealer with a local foreign exchange bank said the rupiah
strengthened at the expense of state banks. The banks had bought
dollars at the 14,000 to 15,000 level, but sold them at 13,000.

"I suspect this is a kind of concerted effort to shore up the
rupiah's value," he said.

"From one side, it's good. On the other, however, I think it
will be futile because the rupiah can easily weaken in this time
full of uncertainties."

He said the situation would remain unpredictable until a
general election was called and a new president was elected by
the end of this century.

Nevertheless, the rupiah's sharp increase propped up local
share prices with the JSX Composite Index closing up 6.433 points
at 473.772.

Trading volume totaled 461.6 million shares worth Rp 641
billion (US$48.2 million), with gainers outnumbering losers by 55
to 42.

Noraya said investors entered into the buying spree to take
profits from good news spreading in the market, including reports
the government might soon declare a list of "healthy" banks.

It was reported earlier the government would soon select
eight local banks to provide loans to finance exporters and
distributors in an effort to revamp exports and rebuild the
destroyed distribution networks.

The banks are reportedly state, publicly-listed Bank Negara
Indonesia and state Bank Rakyat Indonesia, and privately owned
Bank Bali, Lippo Bank, Bank Pan Indonesia, Bank Buana Indonesia,
Bank International Indonesia and Bank Niaga.

Speculation was rife the banks might be declared healthy by
the government to help boost the stocks of the listed ones.

Bank International Indonesia closed Rp 50 higher at Rp 375 on
62.9 million shares changing hands, Bank Bali rose Rp 100 to Rp
1,100 on 9.3 million shares.

Meanwhile, Lippo Bank added Rp 25 to Rp 875 on 24 million
shares, Bank Pan Indonesia rose Rp 50 to Rp 425 on 5.68 million
shares and Bank Niaga gained Rp 50 to Rp 350 on 3.7 million
shares.

Heavyweight state domestic telephone monopoly PT Telkom gained
Rp 150 to Rp 4,500 on 7.8 million shares traded, while state
satellite operator PT Indosat lost Rp 1,000 to Rp 14,500 on
471,000 shares.

Food giant PT Indofood Sukses Makmur added Rp 475 to close at
Rp 2,325 on 50.8 million shares traded, diversified PT Astra
International rose Rp 50 to Rp 1,125 on 14.7 million shares.

Cigarette giant PT Gudang Garam gained Rp 400 to close at Rp
8,600, while competitor PT HM Sampoerna was unchanged at Rp
2,500. (rid)