Share prices fall along with rupiah
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)
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