Rupiah strengthens to 15,000 to the dollar
Rupiah strengthens to 15,000 to the dollar
JAKARTA (JP): The rupiah improved to Rp 15,000 against the
U.S. dollar yesterday following a rally by the Japanese yen and
intervention by Bank Indonesia (BI) to reduce domestic demand for
the dollar, currency dealers said.
Stock prices on the Jakarta Stock Exchange (JSX) followed in
the rupiah's wake and gained almost 5 percent, with the composite
index closing up 20.651 points on 440.093.
Currency dealers said the news that Japan's Exim Bank would
provide Indonesia with a US$1 billion trade financing facility
had also boosted the rupiah.
They added that regional factors, especially the strengthening
of the yen to 136 against the dollar, had also contributed to the
strengthening of the rupiah.
"We cannot deny the fact that the yen determines the ups and
downs of all currencies in the region, including the rupiah," a
dealer with a local foreign exchange bank said.
"Yesterday (Wednesday) the rupiah did not track the yen
because offshore operators played on the rupiah, knowing that
domestic dollar demand was very large. Today (yesterday), they
took their profits," he added.
Domestic demand for the dollar increased following BI's
instruction to commercial banks to settle their foreign exchange
debts and trade finance arrears by June 30.
BI director Miranda S. Goeltom said Wednesday that commercial
banks' trade-related foreign debt arrears totaled US$820 million
and their non-trade-related debts stood at $200 million.
To reduce dollar demand, BI governor Sjahril Sabirin said the
central bank was providing all foreign exchange needed by
commercial banks to pay their foreign debt arrears.
"We will provide the necessary foreign exchange to banks which
have to settle their trade finance obligations," Sjahril told
journalists after signing a $1 billion trade loan agreement with
Japan's Exim Bank.
As a result of BI's intervention the rupiah rose to a day high
of Rp 14,100 from a low of 16,200 in the morning, before closing
at Rp 15,000.
The strengthening yen and the rupiah's reaction encouraged
International Monetary Fund (IMF) Asia Pacific director Hubert
Neiss to express optimism over the prospects of reaching the
target rate of Rp 6,000 to the dollar set by the IMF and the
government earlier this year.
Earlier this week, Neiss, who is heading an IMF review team to
set new policy and budget outlines with the government, said the
Rp 6,000 target exchange rate was unrealistic.
Nevertheless, Neiss said: "We cannot make any precise
forecast. The exchange rate is what the market determines it to
be."
The strengthening rupiah also gave a much needed boost to the
stock market, stockbrokers said.
They said short-term foreign investors started buying certain
valued stocks, especially export earners and dual-listed
companies.
The head of research at Usaha Bersama Sekuritas, Baradita
Katopo, said dollar-valued companies would continue to make gains
in the future.
"Today all companies with dollar revenues like Indah Kiat
gained ground, reflecting their true strength. Only Aneka Tambang
shares remained flat. But I think it's only a matter of time
before they too rise to reflect the companies strength," he said.
Baradita, however, warned: "The increase might not last for
long because there are always profit takers."
Both pulp and paper firm PT Indah Kiat and state-controlled
gold and nickel mining company PT Aneka Tambang export most of
their produce.
Dual-listed firms like telecommunications giants PT Telkom and
PT Indosat, and tin mining company PT Tambang Timah also made
some gains.
Telkom rose Rp 200 to Rp 1,075, while Indosat jumped Rp 575 to
Rp 16,600 rupiah. (rei/rid)