Share prices fall along with rupiah

Fri, 23 Jan 1998, 00:00 WIB | Source: JP

JAKARTA (JP): The rupiah continued its record plunge, almost
bottoming out at 15,000 to the U.S. dollar yesterday, and share
prices on the Jakarta Stock Exchange (JSX) fell 4.8 percent on
persistent negative sentiment.

Currency dealers and stockbrokers said market sentiment
remained bleak yesterday on a combination of rising fears over
the private sector external debt and heightened political
sensitivity over the presidency and vice presidency.

"The market remains negative, even after the government issued
more rulings to implement economic reforms. What matters now, I
think, is how the country resolves its mounting corporate debt,"
a local private bank dealer said.

"Besides, more and more people demand political reforms and
openly express their disagreement with Soeharto's decision to run
in the (March) presidential election for his seventh five-year
term in office," he said.

About 100 youths from various groups picketed at the House of
Representatives' building yesterday, demanding that Soeharto step
down and protesting the International Monetary Fund's involvement
in Indonesia.

Dealers said the spot rupiah touched an all-time low of
14,500/15,000 to the dollar in Jakarta during lunch break before
recovering in the afternoon due to intervention by Bank
Indonesia, the central bank.

The rupiah fell even further in Singapore, down to an abysmal
17,000.

The rupiah closed at 11,800/12,300 in Jakarta against an
opening of 10,500/11,800.

At its current level, the rupiah has lost about 60 percent of
its value against the dollar since the beginning of this year and
80 percent since early July when the rupiah was at 2,450.

Dealers said the rupiah managed to recover yesterday afternoon
due to the central bank's limited intervention in the foreign
exchange market.

"The central bank was seen intervening in the market
repeatedly through several state banks at different levels," the
chief dealer said.

The dealer said the central bank was seen selling a limited
amount of dollars when the rupiah was at 13,400, 12,500 and
12,400.

Some dealers suggested that the central bank impose a limit on
foreign exchange transactions in the next few days to prevent the
rupiah from descending further.

"The government can, for example, record people who make a lot
of dollar purchases and their purpose for purchasing that
amount," another local bank dealer said.

But the most important thing, they said, was for the
government to help resolve the mounting private sector debt.
Otherwise, the rupiah would continue to tumble.

As the rupiah crashed, stock prices also declined with the JSX
main index closing 4.8 percent lower on investors' panic selling
triggered by the sharp plunge of the rupiah against the dollar,
brokers said.

The JSX composite index ended 22.47 points lower to 443.52
yesterday with about 536.7 million shares changing hands valued
at Rp 810.96 billion ($67.58 million).

An analyst with a joint-venture securities firm who asked for
anonymity said the persistent fall of the rupiah forced most
companies to the brink of collapse because they had difficulties
in covering their dollar obligations.

"Most companies have technically gone bankrupt at the current
level of the rupiah. We're just waiting for the announcement of
their collapse in coming months," the analyst said. (aly)