Rupiah weathers pressure, stocks down
JAKARTA (JP): The Indonesian rupiah withstood regional pressure yesterday, while stock prices were forced down, dealers and stockbrokers said.
Currency dealers said the rupiah was surprisingly strong despite improved liquidity in morning trading, compared with other regional currencies.
The rupiah was hovering at a range of between 3,630 and 3,675 against the U.S. dollar in the morning.
But in the afternoon, the rupiah suddenly dropped and touched the day's low of 3,700 before recovering back to close at 3,655/75 due to a mild intervention by Bank Indonesia.
"I saw Bank Indonesia intervened in the market once, and it was enough to bring the rupiah back to its previous range," a bank dealer said.
While the rupiah was stable, share prices on the Jakarta Stock Exchange were forced down by bearish regional sentiments.
The composite index was down 9.735 points, or 1.89 percent, to close at 505.233, with volume totaling 208 million shares worth Rp 312 billion (US$86.6 million).
Stockbrokers said investors were still waiting on the sidelines as there were no fresh incentives to reenter the market.
News about plans of some firms to float their shares on local stock markets also failed to boost market sentiments, they said.
The market might still be waiting for the result of the talks between Indonesian officials and the International Monetary Fund (IMF) team, they added.
Minister/State Secretary Moerdiono said on Tuesday that the talks were at a final stage and were expected to be concluded before the end of the week.
Besides the IMF factor, a stock analyst said, investors were still calculating the impacts of the rupiah's sharp devaluation on Indonesian corporations and the economy.
"That is a variable that people are looking at right now, regardless of what the IMF will decide. That variable will not be clear in the short term," he said.
Like in the stock market, currency dealers said, the currency market seemed to have no clear indication either on where the rupiah would head next.
They said liquidity was sufficient after the central bank re- opened the short-term money-market securities (SBPUs) facilities and cut the foreign exchange reserve requirement to 3 from 5 percent.
The improving liquidity kept interbank rates and swap rates relatively low.
Overnight rupiah were at 14 percent. Overnight dollars were at 6.5/7.0 percent, down from 9 percent last week and over 10 percent the previous week.
The overnight swap was at 0.15/0.25 and tom/next at 0.5/0.6.
The one-week swap was at 2/3, two at 7/11, one-month at 25/30, two at 55/65, three at 95/110, six at 205/215 and one-year at 395/420 points.
"The steady rupiah supply in the currency market is seeming to appease panic and restore confidence in the rupiah. It contradicts with market rules," the dealer said. (rid)