Rupiah strengthens, stock prices ascend

Rupiah strengthens, stock prices ascend

JAKARTA (JP): The rupiah extended gains against the American
dollar yesterday, supported by market optimism on the
government's determination to continue reforms, currency dealers
said.

Stock prices on the Jakarta Stock Exchange (JSX) also gained
ground, with the benchmark price indicator rising 5.4 percent.

Currency dealers said the market was optimistic about the
outcome of negotiations between the International Monetary Fund
(IMF) and the government on economic reforms to be announced
today.

"We've seen a strong appreciation of the rupiah against the
U.S. dollar over the last few days due to the improving
sentiment," a dealer with a state bank said.

The spot rupiah closed at 7,400/7,600, compared to an opening
of 8,000/8,200. It topped 7,200 yesterday, from an early low of
8,300.

The rupiah crashed to an all-time low of 10,000 against the
dollar on Thursday last week.

Dealers said trading remained thin with most overseas
operators seen selling dollars in the market, due to fears of the
rupiah strengthening.

"Many Singapore operators were selling a lot of dollars in the
market yesterday. They feared the conclusion of talks, to be
announced by the government tomorrow (today), will put the rupiah
on an upward trend," a dealer said.

Dealers were upbeat about the rupiah strengthening to 7,000 or
even 6,000 if the reform package, to be announced today,
satisfied the market.

"I'm personally optimistic the rupiah will reach that level by
the end of the month if the government introduces measures as
required by the market," the dealer said.

As the rupiah recovered, stock prices on the JSX rose 5.4
percent, with the composite index closing 21.85 points higher to
403.98 yesterday.

Over 781 million shares changed hands in the regular market
worth Rp 812.88 billion (US$109.84 million).

"I think the overall mood was really good today (yesterday)
with most domestic investors buying big in blue-chip stocks," a
broker with a joint-venture brokerage house said.

An analyst with a joint-venture securities firm said trading
activity over the past few days was largely based on speculation
rather than fundamentals.

"I think the market is focusing on the IMF now. Anything good
in the capital market in the last few days is associated with
talks between the IMF and the Indonesian government," the analyst
said.

"If the government comes up with concrete economic reforms,
the market will surely catch up in the coming weeks. If not, the
market will punish it even more," he said. (aly)

Currencies -- Page 11