Rupiah surges further, share prices rise 10.7%
Rupiah surges further, share prices rise 10.7%
JAKARTA (JP): The rupiah surged to 8,200 against the U.S.
dollar on Friday, sparking a 10.7 percent gain in share prices.
Currency dealers said the rupiah, like all regional
currencies, was boosted by the unexpected U.S. interest rate cut.
"A lot of it has to do with the rate cut. The rupiah does not
stand alone, it strengthens in tandem with the yen, the baht, the
Singapore dollar and other regional currencies," a dealer with a
local private bank said.
The rate cut sent the dollar retreating against major
currencies, particularly the yen. The Japanese currency
strengthened to a low of 115.45 against the dollar early Friday.
The rupiah opened at 8,650 against the U.S. dollar and shot up
to 8,200 by the Jakarta trading close, a 5.7 percent rise from
Thursday's close of 8,700 and its highest level since May 6.
The dealer said offshore operators, which had persistently
built on long dollar position, continued to unload their dollars
for rupiah to reduce their risks.
"Unlike in previous weeks when the strengthening of the rupiah
was strongly related to state banks' dollar selling, today it was
foreign operators which sold dollars. And I didn't see any dollar
selling by state banks today," the dealer said.
Bank Indonesia Governor Sjahril Sabirin gave quite a different
account of the strengthening of the rupiah, saying it was boosted
more by foreign confidence in the country than by the rate cut.
"Maybe there is an impact (of the rate cut), but I think the
current strengthening of the rupiah is strongly related to what
we have been doing so far," Sjahril told journalists at the House
of Representatives on Friday.
A dealer with another local private bank agreed and said
investors' bullishness on the rupiah had built up in the past
week.
The U.S. rate cut was just merely supplemented the already
bullish mood in the local unit, he said.
The relatively stable domestic political situation also
contributed to the bullish sentiment on the rupiah, he said.
"If this situation prevails, I believe the rupiah could easily
break the 8,000 level."
Riding the strengthening rupiah, stock prices on the Jakarta
Stock Exchange surged 10.7 percent, with the JSX Composite Index
rising 32.74 points to close at 337.58.
Trading turnover totaled 384.95 million shares worth Rp 473.53
billion.
Stockbrokers and securities analysts said investors who
flocked to the local market on Thursday were mostly motivated by
the U.S. rate cut.
Anton Karlam, an analyst at Panin Securities, said the U.S.
rate cut fueled speculation of an imminent rate reduction by
central bankers in industrial nations and nations in crisis like
Indonesia.
He said many investors bought dumped stocks of companies with
large debts as the strengthening of the rupiah had increased the
likelihood they would repay their offshore debts.
Most large-cap stocks gained ground, with state domestic
telephone monopoly PT Telkom rising Rp 450 to close at Rp 2,275
on 43.5 million shares traded, while state-owned satellite
operator Indosat climbed Rp 1,375 to Rp 8,325 on 3.34 million
shares.
Cigarettemaker PT HM Sampoerna gained Rp 550 at Rp 3,350 on
13.93 million shares changing hands, while competitor PT Gudang
Garam was up Rp 1,400 at Rp 8,450 on 2.43 million shares.
Car manufacturer PT Astra International was up Rp 75 at Rp 450
on 28.79 million shares, while state general mining firm PT Aneka
Tambang was up Rp 125 at Rp 1,500 on 29 million shares. (rid)