Rupiah stronger over news on Soeharto trip

JAKARTA (JP): The rupiah closed higher against the U.S. dollar yesterday as the market calmed down following news that President Soeharto would attend a regional summit in Malaysia, currency dealers said.

But the stock market lost 2.2 percent as state-owned securities houses, which had been active buying stocks for the last four days, ran out of investment resources, stockbrokers said.

Currency dealers said spot rupiah strengthened to 4,380 against the dollar in the afternoon before closing at 4,410, compared with an opening of 4,350/80.

"The rupiah was guarded by Bank Indonesia on several fronts, including the London market. But it was undermined by wild rumors from Singapore," a local private bank dealer said.

Rumors spread through the local market in the morning that security around the Merdeka presidential palace here had been tightened. The rupiah subsequently fell to the day's low of 4,545.

When Reuters denied the rumors, saying that there was no increased security or a concentration of troops in the capital, the market was calmed, the dealer said.

The market received further relief after Minister/State Secretary Moerdiono announced President Soeharto would attend next week's informal summit of the Association of Southeast Asian Nations (ASEAN) in Kuala Lumpur.

"It's heartening to learn that President Soeharto is in good health. This news turned the market around after it was swamped by various rumors," said the bank dealer.

Soeharto was rumored to be seriously ill Tuesday, sending the rupiah to an historic low of 4,600.

Soeharto has been resting at home on doctors' orders since returning last week from a strenuous 12-day trip that took him to southern Africa, Canada and Saudi Arabia.

"It has been foreign operators who created the rumors and made profits, and we have become their victims since people here just believed the rumors," the dealer said.

Dealers said operators were increasingly cautious now. They did not dare take a long position in dollars or in rupiah as the perception was that the rupiah had overshot.

"It could turn around very quickly," another dealer said.

While the rupiah was stabilizing, share prices on the Jakarta Stock Exchange dropped 2.2 percent, with the composite index down 9.559 points to close at 415.937.

Turnover totaled 258.7 million shares worth Rp 333.06 billion (US$75.6 million).

Dealers said the index slipped yesterday because state-owned Danareksa Sekuritas and Bahana Securities were absent from the market after spending huge amounts buying large-cap stocks in the previous four days.

"It was wrong for Danareksa and Bahana to exhaust their resources to prop up the index in such a bearish market. It's just like taking ice to Alaska," said Martin PH Panggabean, an analyst at Lippo Securities said.

State-run telephone monopoly Telkom closed Rp 150 weaker at Rp 3,075 due to profit taking while satellite operator Indosat slipped Rp 25 to Rp 9,150.

Carmaker Astra International was down Rp 175 at Rp 2,150 following figures released earlier yesterday that showed a sharp drop in car sales.

Cigarette maker Sampoerna fell Rp 25 to Rp 4,900, while competitor Gudang Garam fell Rp 375 to Rp 8,275.

Newly-listed Astra Agro, one of the few blue chips to perform strongly, gained Rp 75 to Rp 1,925.

Bank stocks were mostly unchanged. (rid)