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)