Rupiah weakens, stocks strengthen

Rupiah weakens, stocks strengthen

JAKARTA (JP): The rupiah eased again yesterday while the stock
market continued to make gains, currency dealers and stockbrokers
said.

Dealers said the rupiah weakening was due to the Malaysian
ringgit's drastic downfall yesterday, continuing strong corporate
demand for U.S. dollar and ample liquidity.

Spot rupiah recovered to 3,018/20 against the dollar at midday
from an early low of 3,033 but weakened in the afternoon to close
at 3,027/32.

Futures contracts for today and tomorrow closed at 3,025/30
and 3,024/30, respectively.

"The ringgit, strong local demand for dollar and sufficient
liquidity forced the rupiah to trail down today," one local bank
dealer said.

He said liquidity supply improved further, with the maturing
central bank short-term SBI papers totaling 1.24 trillion (US$414
million).

Overnight rupiah quoted among state banks and large sound
banks were stable at 50 basis points above the SBI rate of 15
percent.

The dealer said swap rates continued to ease gradually on the
back of ample liquidity and the lower interest rate trend.

Overnight swap was at 0.30/0.35 and tom/next at 0.7/0.9.

One-week swap was at 4.80/5.25, one-month at 26/28, two at
55/60, three at 80/95, six at 185/200 and one-year at 370/385
points.

The dealer said such a slight easing in liquidity had
triggered increased dollar buying by local corporate companies.

"In this situation, I don't think the central bank would cut
SBI rates as it could knock down the rupiah," he said.

An easing liquidity and lower interest rate trend sent a
positive sentiment to the stock market, stockbrokers said.

Share prices on the Jakarta Stock Exchange gained 1.0 percent
yesterday, with the composite index rising 5.574 points to close
at 559.220.

Turnover totaled 324.6 million shares valued at Rp 436.52
billion (US$144 million).

BZW Niaga Securities' head of trading Adnan Tan said several
foreign investors, after staying on the sidelines for some time,
had started buying local selected stocks.

"What we are seeing is that more and more investors are
starting to feel comfortable with declining interest rates and a
relatively stable rupiah," Tan said.

He said institutional investors helped drive up some big
capitalized stocks like telecommunications firm Telkom, cigarette
maker Gudang Garam and Bank Internasional Indonesia.

"It's a good sign that they started to buy Indonesian stocks
using cash... But I think this is only in the short-term," Tan
said.

He warned that the medium-term outlook was still worrisome as
the weighting of most Indonesian stocks was not improving.

Gudang Garam rose Rp 150 to Rp 9,650 while competitor
Sampoerna was unchanged at Rp 6,875.

Bank Internasional Indonesia gained Rp 50 to close at Rp
1,025.

Telkom helped lead the rise in the index, up Rp 50 rupiah at
3,625 while international telecommunications company Indosat
climbed Rp 50 to Rp 8,125. (rid)