Rupiah weakens as stocks rebound

Rupiah weakens as stocks rebound

JAKARTA (JP): The rupiah weakened further on Tuesday but stock
prices managed to rebound in late trading after a significant
drop in the morning session.

Foreign exchange dealers said lingering negative sentiment due
to the unstable social and political situations were the main
factors behind the weakening rupiah.

"The resignation of acting State Secretary Bondan Gunawan and
news that Bank Indonesia Governor Sjahril Sabirin will resign
added to the already weak sentiment," a dealer at a local bank
said after the close of trading.

The rupiah closed at Rp 8,633 per dollar compared to Rp 8,560
the previous day.

The currency touched its intraday low of 8,725 before it
recovered after Sjahril denied reports of his resignation.

Sjahril denied Tuesday that he will resign as governor of the
central bank.

"I don't have any plan to resign and have never informed the
president that I would resign," Sjahril said in a written
statement.

He called on market participants to remain calm and not listen
to "the baseless news report" about his resignation.

A foreign newswire reported early Tuesday that the central
bank governor had informed President Abdurrahman Wahid that he
would resign later this week over the high-profile Bank Bali
case.

But currency dealers said that the bombings in Medan, the
provincial capital of North Sumatra, on Sunday and Monday were
the main reasons for the bearish currency market.

Participants said that they worried more chaos would follow.

However, a dealer at a state owned bank said that dollars have
been overbought, given the small fluctuations of the rupiah
against the U.S. dollar in the last two days in light of the
worsening security situation.

"But rupiah stability will take time despite the slight
improvement in market sentiment for the Indonesian currency," he
added.

The domestic currency and equity markets will be closed on
Thursday in observance of the Ascension Day of Jesus Christ.

Stocks gain

Unlike the rupiah, the Jakarta Stock Exchange (JSX) Composite
Index managed to rebound as a buying spree occurred in late
trading with numerous stocks benefiting.

The JSX Composite Index, the exchange's main price barometer,
went up by 7.31 points or 1.6 percent at 468.708 after hitting
its intraday low of 441.63.

Gainers exceeded decliners 80 to 38 while 71 stocks were
unchanged.

Gunarto Widyomantoro, operations director of PT Sanex
Securities, speculated that the surge in the main index preceded
defensive actions by the government in a bid to boost market
sentiment before the listing of Bank Central Asia on Wednesday.

"The index was down 20 points in the morning session, but
unexpectedly it turned around and managed to close up seven
points," he said.

He said the government had an obvious interest in creating a
good market for BCA's listing.

The bank offered 662.24 million shares or 22.5 percent of its
total equity in the initial public offering between May 19 and
May 23.

Each share was sold at Rp 1,400.

Gunarto said there was a possibility of profit taking in
shares of BCA on its first day of trading.

"A lot of investors bought shares at the initial public
offering only to sell them back to the market for quick profits,"
he said.

He added that the market in general would remain nervous due
to fears of continued unrest and political instability, at least
until August when President Abdurrahman Wahid is scheduled to
deliver his accountability speech before the People's
Consultative Assembly.

Another analyst at a local securities house said the market
rebound on Tuesday was purely a technical rebound after large
accumulated losses during the past weeks.

"Actually, there was no fresh news that caused the market to
rebound. It was just technical," he said.

Shares of state owned telecommunication company PT Telkom
ended up 3.5 percent or Rp 100 to close at Rp 2,950 and
international call operator PT Indosat rose 1.6 percent or Rp 150
to Rp 9,500.

PT Astra International increased by 7 percent or Rp 175 to Rp
2,700 on the company's announcement of reaching a break even
point during the first quarter.

And cigarette maker PT HM Sampoerna rose by Rp 25 to Rp 11,600
while competitor PT Gudang Garam lost Rp 50 to close at Rp
11,525. (udi)