Rupiah strengthens, stock prices slightly firmer

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)