Rupiah strengthens to 7,400 but stock exchange loses steam
Rupiah strengthens to 7,400 but stock exchange loses steam
JAKARTA (JP): The rupiah closed firmer at 7,400 against the
U.S. dollar in very light trading on Tuesday, but stock prices
fell 0.1 percent on profit taking, currency dealers and stock
brokers said.
Currency dealers attributed the firm rupiah to bullishness in
the region's currency markets and to a foreign investment house
in the Singapore market which sold a large amount of dollars for
the rupiah.
Dealers said that the rupiah, which opened at 7,500, climbed
to the 7,400 level in late trading following the dollar selling
by the investment firm in Singapore.
"We are a bit surprised to see such a foreign investment house
selling dollars for the rupiah," a chief dealer with a joint
venture bank in Jakarta said.
Dealers suspected that the investment firm sold the dollars
for the rupiah after it aggressively purchased the greenback when
the financial crisis hit Indonesia in August last year.
Dealers said, however, that trading activities in the currency
market had significantly dropped, as most market participants who
were active in moving the rupiah, had stayed away from the
currency market ahead of the year-end holidays.
Unlike previous days which saw certain state banks selling
dollars for rupiah, Tuesday's market saw no such activity,
dealers said.
But currency dealers said that commercial dollar demands were
expected to rise in the coming days as certain companies would
feel comfortable purchasing the dollar now that it has broken
below the 7,500 level.
"The year-end demand for the dollar might push the rupiah back
over the 7,500 level," the dealer said.
Dealers said political and social instability in Indonesia,
where antigovernment protests continued in the capital, failed to
affect market sentiment in the currency market.
"Unlike previous days, political instability is no longer a
major factor in moving the rupiah," the dealer said.
Unlike the rupiah, share prices in the local stock market lost
steam, closing 0.1 percent lower on Tuesday as profit taking on
several blue chip stocks weighed down market sentiment.
The Jakarta Stock Exchange Composite Index fell 0.55 points to
398.90, with 267.54 million shares changing hands at a total
value of Rp 257.76 billion (US$35.10 million).
Decliners outnumbered advancers by 56 to 41, with 91 stocks
remaining unchanged.
Stock brokers attributed the slight fall in share prices to
profit taking by certain foreign investors on the gains they made
earlier this week.
"Massive profit taking on certain blue chips was capped by the
rise in PT Telkom," Vonny Juwono, an institutional sales broker
with Trimegah Securindolestari said.
Head of research at Mashill Jaya Securities, Edhi Widjojo,
said that the absence of positive leads in the battered local
market, coupled with persistent political and economic
uncertainty at home, had discouraged foreign investors from
entering the market.
"There is no single factor at this point in time that can
attract foreign funds into the local bourse," he said.
Trimegah's Vonny, however, said that certain foreign brokerage
firms, such as Credit Lyonnais Capital Indonesia, SBC Warburg and
Danareksa Sekuritas, continued to place buy orders in the local
bourse on Tuesday.
While other securities firms like ABN Amro, ING Barings
Securities and Jardine Fleming, which placed massive buy orders
in previous days, unloaded their portfolios in profit taking on
Tuesday.
Share prices of state-telecommunication firm PT Telkom rose by
Rp 100 to Rp 2,975, with 21.43 million shares changing hands, and
mining firm PT Tambang Timah rose by Rp 75 to Rp 6,025, with
290,000 shares changing hands. (aly)