Rupiah weakens as stock prices gain ground

Rupiah weakens as stock prices gain ground

JAKARTA (JP): The rupiah weakened against the U.S. dollar
yesterday as stock prices on the Jakarta Stock Exchange (JSX)
rose 2.9 percent.

"Yesterday (Monday), the rupiah resisted regional weaknesses.
But today (yesterday) it didn't. Positive news disseminated by
the government failed to improve market sentiment," one local
bank dealer said.

Dealers said the rupiah, which managed to go up to 5,550
against the dollar during lunch break from an early low of 5,725
in the morning, closed weaker at 5,600/5,800.

They said the rupiah was dragged down by the fall of the South
Korean won, a downgrade in Asian debt ratings and the dollar
liquidity squeeze.

Another dealer said the market was confused by the
government's plan to issue promissory notes denominated in
dollars.

"Is that part of the IMF- (International Monetary Fund)
supported program or not. We don't know what's really going on as
available information is yet unclear," the dealer said.

The weakening rupiah, however, did not affect stock prices at
the JSX as the main price gauge rose 2.9 percent on strong buying
of most second-line stocks yesterday.

The JSX composite index closed 11.18 points higher to 397.03,
with total turnover of 593.04 million shares valued at Rp 455.09
billion (US$82.7 million).

Stock brokers said the rise of the main index was marred
by the suspension of most second-line stocks when their prices
rose by 20 percent yesterday.

Among suspended stocks were Bakrie Land Development,
Lippoland, Sierad Produce, Royal Sentul Highland, Jaya Real
Property, Maharani Intifinance, Summarecon Agung, Duta Anggada
Realty, Bhuwanatala Indah Permai, Panasia Filament Inti, Sarasa
Nugraha, Sekar Laut and Igar Jaya.

An institutional equity broker with Trimegah Securities said
most companies bought their own stocks to make a good closing
price by the end of this year.

"There is a lot of window-dressing today (yesterday)," the
broker said.

"Some corporations want to make prices of their stocks look
good so their annual financial report looks better," the broker
said.

The head of research at Mashill Jaya Securities, Tjandra
Kartika, said the outlook for the JSX would still be gloomy,
especially after the downgrade of Indonesia's debt by Standard &
Poor's and Moody's Investors Service.

"This downgrade means that Indonesia will be considered a
negative investment spot by most institutional investors in the
United States, like pension funds and insurance companies," he
said.

Meanwhile, the head of research at Pentasena Securities,
Mohammad Syahrial, said the market had anticipated such a
downgrade long before the two agencies announced their new
ratings.

"The overall mood is quite good as the market seems to feel
relieved with the government's moves to set up a special team to
solve private sector debt," he said.

President Soeharto set up a task force Monday, led by former
cabinet minister Radius Prawiro, to help the private sector seek
rollover facilities from foreign creditors.

But Syahrial said the market was still waiting for more
constructive and direct moves on the part of the government to
eliminate various distortions in the economy. (aly/rid)