Stocks and rupiah lose ground in thin trading

JAKARTA (JP): The country's financial markets lost ground yesterday with the rupiah closing lower against the U.S. dollar and stock prices on the Jakarta Stock Exchange (JSX) falling 1.5 percent, analysts and dealers said.

Currency dealers said a combination of a weaker yen against the U.S. dollar, worries about the country's political stability and a gloomy economic outlook brought the rupiah down against the dollar.

"Trading in the rupiah remained thin because most operators sidelined the market," a dealer with a local private bank said.

The dealer, however, said that the weaker yen was the dominant factor in the weakening rupiah.

The rupiah, which opened at 11,250 against the dollar, closed at 11,600 on the Jakarta spot market, down on Friday's close of Rp 11.300.

According to Dow Jones, the yen was trading at 139.59 against the dollar yesterday, down from 138.78 last Friday.

Dealers said that because the yen was expected to fall to 140 against the dollar, the rupiah was expected to break the Rp 15,000 level against the dollar in the days ahead.

"I think the rupiah will likely test the 12,000 level tomorrow (today)," the dealer said.

Currency dealers noted that gloomy economic indicators had also put pressure on the rupiah yesterday.

The central bureau of statistics announced yesterday that the country's gross domestic product shrank by 8.5 percent during the first quarter of this year and the inflation rate rose to 40.06 percent between January and May.

"Hopes for a quick release of the IMF loan package and good results on debt talks were overshadowed by these negative factors," the dealer said.

While the rupiah was weakening, stock prices on the JSX fell 1.5 percent. The index was dragged down by blue chip stocks and stocks linked to the Soeharto clan, brokers said.

The JSX Composite Index closed 6.38 points lower at 414.07 on a total turnover of 157.92 million shares worth Rp 146.27 billion (US$12.72 million).

A broker with Trimegah Securindo Lestari said that trading on the local bourse remained lethargic for the whole day because most investors were still reluctant to enter the market.

"Trading activity was quiet because investors did not want to take any position," he said.

He said that most foreign investors continued to off-load stocks linked to former president Soeharto's family and cronies on the grounds that such holdings would not bear any fruits.

Shares in Bimantara Citra, controlled by Soeharto's second son Bambang Trihatmodjo, fell Rp 100 to Rp 350 on a total turnover of 9.77 million shares, while shares in toll-road operator Citra Marga Nusaphala Persada (CMNP), controlled by Soeharto's eldest daughter Siti Hardijanti Rukmana, closed unchanged at Rp 375 on a total turnover of 7.23 million shares.

An analyst at Harita Securities said foreign investors did not yet feel secure enough to place funds in the country's dire market for fear that political instability would further worsen.

"Some foreign investors are still asking whether the country's political situation has returned to normal," the analyst said. (aly)