Rupiah weakens as stocks rise 3 percent

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)