Rupiah up as House session ends peacefully

JAKARTA (JP): The battered rupiah gained ground on Monday after rallies by President Abdurrahman Wahid's supporters went off peacefully.

Forex dealers said the bullish dollar dipped as profit-taking set in, after weeks of panic-selling had destabilized the local unit, dealers said.

Monday trading took the rupiah to 11,600 against the U.S dollar, compared to 11,800 at market close last Friday.

They said that small amounts of dollar-selling had been enough to prop up the rupiah which was trading in a thin market.

Sunday's peaceful mass prayer of President Abdurrahman supporters helped open trading with a positive market sentiment.

Analysts said that tight security measures by police further calmed market fears of street violence.

Nonetheless, these worries had many participants avoid trading, Bank Mandiri currency analyst Martin Pangabean said.

"The market was thin because many people dared not to trade ... and corporate demand (for dollars) was as good as none," Martin said.

He suspected that banks did most of the trading, wanting to circulate their dollars to gain on the trading spread.

"Individual players were negligible," he added.

Worries of an outbreak of violence have run high over recent weeks, with thousands of President Abdurrahman's supporters feared of causing violent riots in Jakarta.

Fearing clashes between Abdurrahman's supporters and opposition, the market piled the dollar causing the greenback to break the 12,000 level during Thursday's trading.

Most of the President's supporters belong to the Nahdlatul Ulama (NU), an organization Abdurrahman led for more than 15 years, and which organized the mass prayer on Sunday.

Apparently meant as a show of force ahead of the House's plenary session on Monday, the event failed to attract the 400,000 supporters President Abdurrahman had claimed would flood Jakarta.

On Monday, the supporters also decided to cancel a rally in front of the House compound, further easing worries of clashes with security personnel.

Late on Monday night, the House finally issued the second memorandum against the President for his alleged involvement in two financial scandals, a move that brings him closer to impeachment.

Martin said the market was not entirely safe yet, with big street rallies expected for Tuesday's May 1 World Labor Day.

But with many of the President's supporters from Central and East Java remaining in the capital, the rallies could prove to be dangerous, he said.

"The market is shifting its attention to these events. It's doubtful the police could control such large masses of people if they confronted one another," he added.

Martin said that the rupiah would remain in a thin market on Tuesday, making it prone to volatile trading.

"In a thin market the rupiah can go either way: add small amounts of dollars and it will shoot up," he said, adding: "it's going to be volatile."

Meanwhile, PT Bhakti Investama stock analyst Budy Ruseno said the peaceful rally of President Abdurrahman's masses encouraged investors to go bargain hunting.

The Jakarta Stock Exchange Composite Index rose slightly to 358.23 from last week's closing of 347.68.

According to him, the index's gain could, however, prove temporary since most local players tended to buy on speculation.

"I don't think the index can sustain this upward trend for very long," he said. (bkm)