Rupiah stronger over news on Soeharto trip

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)