Rupiah weakens slightly as stocks decline

Rupiah weakens slightly as stocks decline

JAKARTA (JP): The rupiah weakened again yesterday on fears
that recent riots in towns in Java and Sulawesi would spread to
other major towns in the country.

The rupiah, which burst upward to below 9,000 against the U.S.
dollar Wednesday, lost footing to close at 9,400/9,700.

Currency dealers said that if the riots spread to major
cities, the country's ailing economy would worsen.

"This will in turn impact on confidence in the future of the
rupiah," one of the dealers said.

Spiraling increases in the prices of essential goods have
prompted unrest in several towns in East Java and Sulawesi.

Analysts say they fear the economic crisis, which has caused
the layoffs of millions of people, would further fuel social
unrest especially before the presidential election in March.

Members of the People's Consultative Assembly will convene
here from March 1 to 11 to elect a new president.

President Soeharto is expected to return to office for a
seventh consecutive five-year term amid calls for him to step
down.

Troops were seen yesterday staging a security exercise at the
House of Representatives yesterday to prepare for next month's
election.

Sources said a similar exercise would be held today and
tomorrow.

As the rupiah weakened, stock prices on the Jakarta Stock
Exchange (JSX) slid 1.2 percent yesterday on another round of
profit-taking after sharp gains Monday.

"Investors, who have made massive buys of blue-chip stock at
the beginning of this week, are taking profits on fears of a
strengthening rupiah," a broker with Trimegah Securities said.

The JSX Composite index closed 6.44 points lower to 513.48
yesterday from 519.92 the previous day.

Over 680.78 million shares changed hands on the regular market
valued at Rp 752.97 billion (US$79.26 million).

Securities analysts said foreign investors would cash out
before any there was any further weakness in the rupiah against
the dollar.

"I don't think there have been any major changes in the
economic fundamentals. People are still cautious about the long
term prospects of the country's economy," an analyst from a joint
venture securities firm said.

Securities analysts said the market expected more bad news in
the coming weeks as political and social unrest spread due to
escalating prices ahead of the presidential and vice presidential
election in March.

"Political stability is an important factor for most foreign
investors investing in a country. They will not stay long unless
they are sure of the country's political stability," the analyst
said. (aly)