Rupiah strengthens, stocks gain

JAKARTA (JP): Bank Indonesia gave a push to the rupiah yesterday, which slipped to a record low of 6,000 against the U.S. dollar, while local stock prices gained ground, currency dealers and stockbrokers said.

Dealers said the rupiah strengthened in the afternoon after the central bank stepped in. The spot rupiah closed at 5,450/5,550 to the dollar, compared with an opening of 5,750/5,900.

Share prices on the Jakarta Stock Exchange also rose almost 4.7 percent on improving rupiah and government support for state- run blue-chip companies.

Dealers said there was some resistance against the dollar moving up from the 6,000 level as some operators were nervous to maintain their long dollar position in the current volatile market.

"Many foreign players sold dollars to take a profit, preventing the rupiah from sliding further. They did not want to be trapped and be burned by the very undervalued rupiah," a local private bank chief dealer said.

He said Bank Indonesia moved in when the rupiah was already recovering from its worst dive ever yesterday, making some market players nervous.

"I think, in this very unpredictable situation, anybody with an open position will never have a good sleep until they get squared," he said.

The central bank sold dollars when the rupiah was traded at the 5,700 level, pushing the currency up to the day's high of 5,400.

"Bank Indonesia intervened just once, with a small amount of dollars, but it already stirred up the market. If it could do it again in a tactical way, I believe it could help the rupiah," the chief dealer said.

Much like neighboring Southeast Asian currencies, Indonesia's rupiah has been falling for months. Its sharpest fall, however, came last week amid unfounded rumors that President Soeharto had become seriously ill, suffered a mild stroke, or even died.

Soeharto has been resting at home on doctors' advice since Dec. 5 after a long overseas trip. The government has constantly denied the rumors, and Soeharto himself has also appeared on television several times to assure the public he is fine.

Dealers said the rupiah could weaken or strengthen sharply any time as the trading band was still large, at 100 to 200 rupiah. They said Bank Indonesia was likely to intervene more in the market toward the year's end to shore up the rupiah.

Meanwhile, share prices on the Jakarta Stock Exchange made some gains yesterday, with the composite price index closing up 16.84 points at 356.38 after a sharp fall of 7.2 percent on Monday.

Securities analysts said yesterday's rise in the local market was partly driven by state-owned securities houses' support for undervalued state-owned stocks.

"I think it is just a technical rebound today (yesterday) after a sharp fall on Monday," a stockbroker with a local securities company said.

The broker also attributed yesterday's increase to market talk that the government would likely launch another deregulation package to boost the stock market by the end of this year.

But most securities analysts said the overall mood remained weak for the local market as concerns over the weakening rupiah loomed, forcing most investors to stay on the sidelines of the local stock and financial markets.

"Investors are still concerned about the President's health and persistent fall of the rupiah," the head of research at Mashill Jaya securities, Tjandra Kartika, said.

"Though stock prices have been low and the main price index has declined sharply, investors are still waiting for the recovery of market confidence," added Christina Lim, managing director of Harita Securities.

She shared with many other analysts' argument that investors would likely enter the market again next year if market confidence was restored. (aly/rid)

Currencies, stocks -- Page 11