Rupiah weakens as stocks rise 3 percent

JAKARTA (JP): The country's financial market ended on a different note on Wednesday with the rupiah weakening nearly 1 percent against the U.S. dollar but local stocks prices rising 3 percent.

Currency dealers said the rupiah, which opened at 9,100/9,150, fell to an intraday low of 9,350 against the American dollar as some offshore players lodged another unexpected speculative attack on the local beleaguered unit during the lunch break.

"Offshore speculators sold the rupiah when it was near 9,000 and forced it to hit the 9,350 level," a dealer with a joint venture bank said.

He said certain state banks, which previously acted on behalf of the government to sell dollars, did not step in to defend the rupiah.

"They even placed dollar bids, probably to service their customers," the dealer noted.

The rupiah finally ended trading at 9,175 against the American dollar on Wednesday, lower than its close at 9,100 on Tuesday.

Currency dealers said they expected another range-trading in coming days, with the rupiah predicted to stay at between 9,200 and 9,500 to the dollar as the market was greatly concerned over the worsening political climate.

A deteriorating political situation will keep sentiment pessimistic over the rupiah in the medium and longer term, they said.

Unlike the rupiah, share prices on the Jakarta Stock Exchange (JSX) rose 3 percent with the JSX Composite Index, the main price index, climbing 12.09 points to close at 410.25.

Trading turnover totaled 242.2 million shares valued at Rp 272.24 billion.

Advancers outdistanced decliners 57 to 29 with 60 stocks remaining unchanged.

Stockbrokers and analysts attributed the rise to bullish sentiment in the regional equity markets following an overnight rally in Wall Street.

"On top of that, the speculated-about massive demonstration did not take place today," Vonny Juwono, an institutional sales broker with Trimegah Securindolestari, said.

She said the rise of local stock prices on Wednesday was much more technical, following a massive fall early this week.

Stock analysts, however, said the rise in local stocks did not reflect a recovery of foreign investors' confidence in the local battered market as they were still cautious over the country's medium and long-term prospects.

"I think the rise was merely a technical rebound and will not last long," an analyst with Mashill Jaya Securities said.

Stockbrokers said several foreign brokerage firms including Credit Lyonnais, Parisbas Asia Equities and Merrill Lynch Securities were among the net buyers. They placed massive funds on blue chip stocks, including the country's second largest cementmaker PT Indocement Tunggal Prakarsa.

Trimegah's Vonny said Indocement stock was the most active stock on the local bourse with its share price rising Rp 650 to close at Rp 3,775 following speculation that two international investors -- French La Farge and Germany's Heidelberger -- would reach an accord with the firm in the near future. (aly)