May 18 13:22

Indonesia shares fall 3.62 percent, rupiah at fresh low

Jakarta (Antara News) - Indonesian share prices slid 3.62 percent during the morning session Thursday amid worries over further US interest rate hikes and as the rupiah also fell sharply against the dollar, dealers said.

At the midday break, the Jakarta Stock Exchange composite index was down 52.889 points at 1,409.269, off an intra-day low of 1,375.069. Volume was 1.51 billion shares valued at 1.60 trillion rupiah (177 million dollars).

Losers led gainers 116 to 5, with 25 stocks unchanged.

"It is basically panic selling. What we have seen this week was panic selling on Monday and Tuesday, then panic buying on Wednesday, and again today we see panic selling," Ryan Ariadi Suwarno, an analyst with Dongsuh Kolibindo, was quoted by AFP as saying.

He said higher-than-expected April inflation figures for the United States were bad news for hopes of domestic interest rate cuts, given that the central Bank Indonesia has just begun bringing down its key rate last week, a move needed to boost the economy after weak growth in the first quarter.

Meanwhile the rupiah fell to 9,250/9,270 to the dollar, sharply down from Wednesday's level of 8,910/8,920.

The fresh fall was caused by global factors and investors remain attracted to Southeast Asia's largest economy due to government policies, Economy Minister Budiono said.

"This is a global process from the past several days and we're impacted by it," Budiono told reporters.

"I think the policies of the government are still okay," Budiono said.

Foreign exchange dealers also attributed the rupiah's drop to concerns over further US interest rate hikes.

On Tuesday the rupiah touched a low of 9,400. (*)
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