Rupiah strengthens to 7,800 against dollar

JAKARTA (JP): The rupiah maintained its winning streak on Monday, rising 4.8 percent to 7,800 against the U.S. dollar, while local stocks lost some of their previous gains.

Currency dealers attributed the strengthening rupiah to offshore dollar selling for the rupiah in response to positive remarks by the International Monetary Fund (IMF) on the rupiah's appreciation against the American dollar in recent weeks.

The IMF's Asia Pacific director Hubert Neiss said on Monday that there was still room for the rupiah to appreciate in the coming days.

"We saw some persistent dollar selling for the rupiah by some offshore operators, especially banks in Tokyo and Hong Kong," a dealer with a local private bank said.

He added that some state banks were also seen selling dollars.

The rupiah opened at 8,200 to the dollar and broke through the 8,000 barrier in the early afternoon. It then continued to strengthen, hitting a high of 7,700 before closing in Jakarta trading at 7,800.

Dealers said that positive sentiment on the rupiah after the IMF signed a new letter of intent with the government on Monday would provide more leeway for the rupiah to test the 7,500 level in the coming days.

Despite the strengthening rupiah, stock prices on the Jakarta Stock Exchange slid 0.35 percent on Monday after the 10.7 percent jump recorded on Friday.

The JSX Composite Index closed 1.16 points lower at 336.418 on a total turnover of 348.8 million shares valued at Rp 450.86 billion.

Losers outpaced gainers by 43 to 37, with 82 stocks unchanged.

Stockbrokers said the general fall in regional markets had caused investors in the local bourse to cash in profits on the gains they made late last week and early on Monday morning.

"I think the decline in other regional markets was the main reason for the fall in our stock market," an institutional sales broker with Trimegah Securindolestari said.

He said some investors were seen placing buying orders on certain blue chip stocks in the morning to take advantage of the U.S. interest rate cut announced last week.

"Though we still saw some buying programs in the morning ... selective profit taking in late trading capped the buying spree," the broker said.

He said certain foreign brokerage firms, like ABN AMRO, Indosuez WICarr Securities, ING Barings Securities, Jardine Fleming Nusantara and Credit Lyonnais had placed more buying orders than selling orders.

Head of research at BNI Securities Adrian Rusmana said that many foreign investors were not yet tempted into taking up long term positions on the local market because they were still concerned with the dire outlook for the country's economy.

"Foreign investors do not want to stay here for a long time because of the country's bleak economic outlook," he said, pointing to high interest rates in the banking system.

Most blue chip stocks, which were the main target of buyers last week, fell in value, with heavyweight domestic telephone monopoly PT Telkom's share price sliding Rp 125 to close at Rp 2,150 on 34.29 million shares traded.

Shares in international call operator PT Indosat, however, rose Rp 475 to Rp 8,800 on 2.29 million shares traded.

Cigarette maker PT Gudang Garam's shares fell Rp 100 to Rp 8,350, while rival PT HM Sampoerna rose Rp 300 to Rp 3,650 on 12.14 million shares traded. (aly)