Rupiah weakens, stock prices gain ground
JAKARTA (JP): The rupiah weakened to 14,800 against the U.S. dollar yesterday over regional weaknesses as local stock prices gained 1.9 percent on arbitrage trading of dollar-valued stocks.
Currency dealers and stockbrokers said the market was eyeing the government's new deal with the International Monetary Fund (IMF), expected to be signed today.
The good news that the IMF might soon disburse its loans to Indonesia, however, failed to soothe the domestic market, still plagued by political uncertainties.
"Good news from the IMF is only having a little impact on the market. The rupiah's standing today was very much undermined by the yen's fresh fall against the dollar," a chief dealer with a local foreign exchange bank said.
He said rupiah fell to an intraday low of 15,100 to the U.S. dollar in quiet trading following the yen's fall to 141 against the greenback.
The rupiah, however, rebounded to above the 15,000 level as a protest organized by the Indonesian Prosperous Trade Union ended peacefully and was smaller than expected.
In ended the day at 14,800/900, compared to Tuesday's close of 14,500.
"The market was relieved that the protest did not escalate into riots," the chief dealer said.
Stockbrokers and analysts said the weakening rupiah had encouraged stock investors to conduct arbitrage trading on dual- listed stocks to capitalize on the rupiah's fall.
The Jakarta Stock Exchange (JSX) composite index closed 7.875 points higher at 430.960.
"It's always like that. When the rupiah drops, investors will run after dual-listed stocks like Telkom to benefit from the difference between their dollar and rupiah prices. This in turn will drive up the benchmark price index," Vickers Ballas Tamara's head of research, Noraya Soewarno, said.
She said the Indonesian stock market's standing had been saved by dual-listed stocks like state-owned telecommunications firms PT Telkom and PT Indosat and tin miner PT Tambang Timah, which together account for 30 percent of the market capitalization.
Telkom gained Rp 150 to close at Rp 4,050 on 1.4 million shares traded, Indosat climbed Rp 175 to Rp 15,875 on 603,500 shares and Tambang Timah rose Rp 25 to Rp 6,475 on 173,000 shares traded.
Other movers were large-cap cigarette maker PT Gudang Garam and its competitor PT H.M. Sampoerna. Gudang Garam gained Rp 650 to close at Rp 8,650 on 1.6 million shares traded and Sampoerna rose Rp 25 to Rp 2,025 on 20.9 million shares.
Surprise gainers included the Salim Group's cement company PT Indocement Tunggal Prakarsa and food giant PT Indofood Sukses Makmur.
Indocement stocks rose Rp 225 to Rp 3,975 on 301,000 shares traded on news that it would export about two million tons of cement this year.
Indofood shares gained Rp 25 to close at Rp 1,300 on 7.36 million shares traded after the food giant said it would be able to service its foreign debt through its US$100 million cash in hand and this year's expected $300 million of exports.
Stock analysts, however, warned that this bit of the buying of the Salim Group's companies did not represent significant developments for those companies.
They said investors, especially foreigners, had been buying quality stocks, especially those of state-owned firms in which the government planned to divest more of its stakes.
However, they warned that the Capital Market Supervisory Agency's (Bapepam) sudden move to investigate securities houses for possible insider trading of state-owned cement producer PT Semen Gresik stocks could discourage investors from investing here for a while.
If the agency could move objectively and transparently against those securities firms, it would encourage foreign investors to return their funds here, he said. (rid)