Rupiah strengthens, stocks hit low
Rupiah strengthens, stocks hit low
JAKARTA (JP): The rupiah broke the 11,000 barrier against the
U.S. dollar to close firmer at 10,950 in moderate trading on
Tuesday, but local stock prices fell 4.8 percent to touch another
five-year low, currency dealers and stockbrokers said.
Currency dealers said Malaysia's plan to introduce foreign
exchange control measures and limited dollar-selling for the
rupiah by the country's state banks had provided more leeway for
the rupiah to move ahead Tuesday.
Dealers said the rupiah, which opened at 11,100 in the
morning, soared to an intra-day high of 10,750 as a result of
Malaysia's new capital control move.
"Malaysia's new move gave a big boost to other currencies in
the region, including the rupiah," a dealer with a local private
bank said.
Dealers also attributed the strengthening rupiah to a strong
Japanese yen, which traded within a range of 137 to 138 against
the greenback on Tuesday.
"But on top of that, persistent dollar-selling by state banks
helped the rupiah to remain strong," the dealer said.
Dealers said the rupiah could extend its gains as state banks
continue to sell dollars for rupiah, possibly acting on behalf of
the central bank.
In addition, they said the market perceived that Indonesia
could also move the same direction as Malaysia did to peg the
rupiah's exchange rate against a major currency to reduce
fluctuation and help bring down interest rates.
Such perceptions prompted investors to pull out their short-
term investments in Indonesia, especially in equity, and convert
them into U.S. dollars.
Stock prices on the Jakarta Stock Exchange (JSX) tumbled 4.8
percent with the main price gauge sliding 16.58 points to close
at 325.85, a level not seen in the last five years.
Trading turnover totaled 167.47 million shares changing hands
valued at Rp 196.70 billion (US$17.88 million).
The head of institutional sales at Mashill Jaya Securities,
Antonio Yongnata, said that Malaysia's move on foreign exchange
capital controls to jack up the ringgit's value had triggered
panic selling in the regional market.
"Most investors in the region, including Indonesia, are panic
selling because they fear that the monetary authority in their
respective countries will apply a similar move like what Malaysia
did," he said.
He said that most foreign investors continued to dump their
stocks, including large-capitalized stocks, in the local market
to avoid losses.
"Investors fear that if they put some funds in the market,
they will have difficulty getting their money back," he said.
The head of research at Sigma Batara Securities, Fadjar Limin
Sutandi, said that the absence of positive news in the hammered
local bourse had forced most investors to shun the market.
"There are no fresh leads at all in the market. Consequently,
most people continue to sell blindly," he said.
He said the market was still plagued with negative news, like
poor first-half corporate results, high interest rates and
ongoing political and social uncertainty.
Both Fadjar and Antonio said that political uncertainty would
remain a significant factor in driving down stock prices, though
some stocks had been oversold.
Most blue-chip stocks fell, with market leader state
telecommunications firm PT Telkom sliding Rp 325 to Rp 2,025 on
18.66 million shares changing hands. (aly)