Testing time again for rupiah, local stocks down 1.7 percent

JAKARTA (JP): The rupiah wavered on Thursday to close at 7,800 against the U.S. dollar from the previous day's Rp 7,600, partly due to a resurgence in speculative trading, analysts said.

Local stocks also lost ground to end 1.7 percent lower on profit taking.

Currency dealers said the rupiah, which has hovered around the 7,500 level to the dollar in the past few months, surprisingly became a fresh target of speculation by certain offshore investment houses.

"Offshore operators are back in the market ... they want to test the rupiah," a chief dealer with a private local bank said.

The rupiah fell to an intraday low of 7,850 on the Jakarta spot market due to fresh speculative attacks by offshore funds. It ultimately settled at 7,800, 2.6 percent down from Wednesday's finish.

Dealers said panic buying of the dollar was short-lived and failed to drag the rupiah through the psychologically important 8,000 barrier because several state banks stepped into the market to sell dollars.

State banks were seen selling dollars for the rupiah at 7,850 and 7,750, dealers said.

"Such limited dollar selling helped the rupiah to recover slightly," a dealer said.

Thousands of students took to main streets again on Thursday in protests demanding former president Soeharto be brought to trial and the military be held responsible for using violence against students.

Persistent antigovernment protests will cast a shadow over the rupiah in the coming days, dealers warned.

Dealers said approval of the International Monetary Fund's US$957 million loan failed to boost market sentiment on the currency.

Mirroring the fall in the rupiah, share prices on the local market plunged, with the Jakarta Stock Exchange (JSX) Composite index falling 1.7 percent (7.11 points) to 405.58 on a total turnover of 287.46 million valued at Rp 303.65 billion (US$38.92 million).

Losers led gainers by 81 to 13, with 78 stocks unchanged.

Stock analysts attributed the fall to massive profit taking on stocks which rallied in previous days and negative impact of the bearish sentiment in other regional markets.

"Foreign investors have stayed clear out of the local market," said Vonny Juwono, an institutional sales broker with Trimegah Securindolestari.

Fitri Murniati of BNI Securities said lack of fresh leads ahead of the year-end had forced most foreign investors to take a wait-and-see attitude for coming days.

"All they want to do is to watch closely the development of the country's political crisis." She believed that resolving the country's political and social crisis would be a key factor in improving the dire economic condition.

Brokers said several blue-chip stocks declined from previous good showings. State telecommunications firm PT Telkom fell Rp 50 to Rp 2,725 on 6.49 million, pulp and paper producer PT Tjiwi Kimia slipped Rp 25 to Rp 2,150 on 1.88 million shares, international call operator PT Indosat slid Rp 275 to Rp 10,325 on 646,000 shares and instant noodle maker PT Indofood Sukses Makmur fell Rp 25 to Rp 4,175 on 3.03 million. (aly)