Rupiah strengthens, share prices up after 10-day drop

JAKARTA (JP): The rupiah strengthened yesterday to pass the 13,000 level against the U.S. dollar and stock prices perked up to register gains after 10 consecutive days of losses.

Currency dealers said the rupiah was boosted by news of rescheduling of Indonesia's sovereign debts and a rebounding yen.

They said several state banks sold dollars in a limited amount in an effort to shore up the rupiah, which has lost about 80 percent of its value against the dollar in the past year.

"Some state banks continue to step into the market in recent days to prop up the rupiah," the chief dealer with a local private bank said.

The rupiah hovered above the 13,000 level in thin dealing. The currency closed 3 percent higher at 12,950 on the Jakarta spot market, compared to its Tuesday close of 13,100.

"The rupiah gained also because of the strong yen," the chief dealer said.

Dealers said the yen strengthened to pass 145 against the dollar from the 147 level Tuesday.

Bank Indonesia's weekly auction of SBI promissory notes at a weighted average interest rate of 69.39 percent resulted in an absorption of Rp 15.14 trillion from the market, allowing no room for players to buy dollars.

Despite this development, some market participants said that continuing groundless rumors of a massive social outbreak in the run-up to the country's Independence Day next week would still cast a shadow over rupiah trading in coming days.

"Though these are just groundless rumors, some investors were greatly concerned over the issue," the chief dealer said.

Jakarta and other cities were rocked by rioting in May which contributed to the resignation of then president Soeharto.

The government and the military have repeatedly assured the public there would be no recurrence of the rioting.

The stable rupiah and regional strength boosted sentiment on the Jakarta Stock Exchange (JSX).

The JSX Composite Index closed 1.57 points higher to 408.63, after nearing the key 400-point level in early trade, on a total trading turnover of 246.99 million shares changing hands valued at Rp 391.36 billion (US$30.22 million).

Gainers outpaced losers by 55 to 40 with 84 shares unchanged.

"The slight increase is purely on a technical rebound as some stocks have been oversold," said head of research of Sigma Batara Fadjar Limin Sutandi.

He added that the rise of other markets in the region on the impact of a strong yen had helped stock prices in the local market to increase slightly.

Most brokers said that despite a slight rise in stock prices yesterday, worries over possible rioting would force most foreign institutional investors to take a wait-and-see attitude or even make sell-offs on blue-chip stocks.

"Uncertainty on the country's economic and social fronts remains a big problem for investors," Sigma Batara's Fadjar said.

Instant noodle-maker Indofood Sukses Makmur rose sharply by Rp 225 to Rp 2,100 on 26.61 million shares on market talk that a foreign company would likely acquire a significant stake of the cash-strapped firm.

International telecommunications operator Indosat rose Rp 200 to Rp 19,175 on 1.13 million shares because the company's stock price was considered cheap by investors. Pulp and paper producer Tjiwi Kimia rose by Rp 50 to Rp 2,125 on 7.18 million shares. (aly)