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)