Rupiah strengthens, stock prices slightly firmer
JAKARTA (JP): The rupiah strengthened, passing the 5,000 mark against the U.S. dollar yesterday, and local stock prices closed slightly firmer in a mild regional recovery, currency dealers and stockbrokers said.
Currency dealers attributed the strengthening rupiah to President Soeharto's public appearance at the graduation day of the Indonesian military academy yesterday after a two-week rest on doctors' advice.
"The market which has been in a panic mood over the past few days was relieved by the President's public appearance today (yesterday)," a local bank chief dealer said.
They said the market was much calmer, and spreads were narrowing further to 100 rupiah from 300 rupiah last weekend as regional markets held onto their recoveries, aided by a resurgence in the Japanese yen against the dollar.
Dealers said spot rupiah closed higher at 4,800/4,900 against the greenback, compared to the opening of 5,300/5,500 in the morning.
Dealers also attributed yesterday's strong rupiah to the government's move to keep the rupiah under the 5,000 level until the end of the year.
"I think the government will continue its efforts to press the rupiah below 5,000 until the end of this year," the chief dealer said.
"If the rupiah can be kept below 5,000, then this will of course reduce losses of indebted companies as they can purchase dollars somewhat 'cheaper' than they expected before," he said.
As the rupiah strengthened, stock prices on the Jakarta Stock Exchange (JSX) gained ground with the JSX main price index rising 2.6 percent, or 9.70 points, to close at 378.38 yesterday.
Trading turnover totaled 481.39 million shares on the regular market valued at Rp 529.70 billion (US$109.2 million).
Like in the currency market, investors in the stock market had also been relieved by Soeharto's public appearance yesterday, dealers said.
"I think the President's public appearance has sent a positive sentiment to the market as investors' panic behavior had calmed down," a broker with a joint venture securities firm said.
Brokers also attributed yesterday's gains to positive news in the last three days, including the Islamic Development Bank's support in the local stock market and new measures to strengthen the market to be launched later this month.
"I think such good news has prevented investors from panicking even more," the broker said.
Mohammad Syahrial, head of research at Pentasena Securities, agreed with the brokers, but suggested that investors should take a 'wait and see' attitude right now in anticipation of a possible stock market recovery next year.
"With a few more trading days left, there is nothing much we can do. We better wait and see," he said.
Most large-cap stocks made gains yesterday, with state-run telephone monopoly Telkom rising Rp 175 to Rp 2,675 while satellite operator Indosat climbed Rp 400 to Rp 9,750. (aly)