Stocks, rupiah up on growing optimism
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) rose 1.7 percent yesterday on growing market speculation that the government would soon peg the rupiah to the U.S. dollar at a fixed rate, stockbrokers said.
They said the market also anticipated that the new cabinet ministers, to be announced by President Soeharto this morning, would soon give an impetus to solve the crisis.
After appointing the cabinet lineup, President Soeharto would likely introduce a fresh move early next week to mend the country's paralyzed economy, stockbrokers said.
"I think many people in the market are optimistic that the President will soon move to establishing the currency board system or just fixing the rupiah's rate against the dollar," a broker with a joint-venture securities said.
He said the market saw that the stalemate between the government and the International Monetary Fund over the former's plan to introduce a currency board would eventually ease after talks between Soeharto and visiting Japanese Prime Minister Ryutaro Hashimoto this weekend.
Harita Securities president Christina Lim said stock prices improved because the market also expected that the new cabinet would soon give clear direction on how the government would deal with the crisis.
"Hopefully, we will see that direction very soon, after the announcement of the new cabinet ministers," she said.
Stockbrokers said trading activities remained moderate for the whole trading day yesterday though several foreign brokerage houses were making big buying orders on certain blue chips.
Brokers said leading foreign brokerages houses like Indosuez WICarr, Merrill Lynch, Jardine Fleming Nusantara, SBC Warburg, Credit Lyonnais were net buyers.
The JSX Composite index closed up 8.54 points to 506.73 yesterday from the previous day's 498.18.
Trading volume reached 468.65 million shares, changing hands on the regular market worth Rp 489.10 billion ($47.02 million).
Tracking the rise of stock prices, the rupiah strengthened slightly against the dollar in moderate transactions.
The rupiah closed at 10,400 against the dollar yesterday, up from the previous day's close of 10,500, currency dealers said.
"Nobody wants to make any transaction when the market remains uncertain like this," a local bank chief dealer said.
He said most foreign operators, especially from Singapore, had squared their positions ahead of the weekend.
However, some operators were seen selling dollars, in the name of their clients who want to get rupiah to pay taxes next week.
Dealers said the composition of the new cabinet and the results of talks between Soeharto and Hashimoto would determine the fate of rupiah on Monday. (aly)