Rupiah strengthens, stocks gain
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