Stock prices increase, rupiah remains stable
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) rose 4.29 percent on renewed market optimism after the government announced new data on private sector debt, stockbrokers said.
Radius Prawiro, chief negotiator appointed by President Soeharto to settle private corporate debts, said yesterday foreign debts of private Indonesian companies accounted for only US$23.07 billion of the total $73.962 billion owed by the private sector.
Foreign firms and joint-venture companies owe the remainder.
He said the International Finance Corporation and other banks would provide $42 billion in credit for 42 local companies.
Prawiro said the government also would move quickly to set up a bankruptcy law in line with International Monetary Fund requirements.
"Such positive news eased worries about the inability of the private sector to deal with their mounting offshore debts," Mohammad Syahrial, the head of research at Pentasena Securities, said.
The JSX Composite Index rose 21.94 points to close at 535.42 yesterday from 513.48 the previous day.
Over 1 billion shares changed hands on the regular market valued at Rp 839.02 billion ($88.71 million).
The head of research at ING Baring Securities, Tom Inglis, said Radius' statement fueled local investor sentiment to buy liquid and quality stocks.
"Although the long-term view is still volatile, the government announcement brings new hope for the recovery of ailing businesses," he said.
Stockbrokers said trading was active yesterday with most local investors entering second-line and first-line stocks.
As stock prices gained ground, the rupiah remained stable against the U.S. dollar, closing at 9,400/9,600 yesterday on the back of massive interventions by the central bank, currency dealers said.
"The central bank was seen in the market at the 9,900 and 9,600 levels yesterday," a chief dealer with a local private bank said.
The dealer said the rupiah weakened to as low as 10,200 in the morning session due to high dollar demand by some local private banks to service their foreign exchange obligations.
"Some local private banks have to buy dollars from the market to settle their foreign exchange obligations with foreign banks," the dealer said.
The central bank, Bank Indonesia, said in a statement yesterday that Indonesia's foreign exchange reserves stood at $19.06 billion at the end of January, enough to cover 4.7 months of non-oil and non-gas imports.
"On top of the mentioned gross foreign assets, Bank Indonesia also has standby loans as of January 1998 worth $1.87 billion," the statement said. (aly)