Rupiah higher as capital inflows go on<\/p>\n
Dow Jones, Jakarta<\/p>\n
The rupiah recovered further on Monday to a four-week high as
\nforeign investors continued to buy local stocks and bonds,
\ndealers said.<\/p>\n
The dollar closed at Rp 10,095 versus its close on Friday at
\nRp 10,215.<\/p>\n
\"Capital inflows to the stock and bond markets continued
\ntoday, but I'm not sure how long this will last,\" a dealer with a
\nforeign bank said.<\/p>\n
He also said significant capital inflows would continue only
\nif the government cuts fuel subsidies by increasing domestic fuel
\nprices to help the state budget.<\/p>\n
State Secretary Yusril Ihza Mahendra on Monday quoted
\nPresident Susilo Bambang Yudhoyono as saying a fuel price hike
\nwill be likely in early October. But Yusril said the government
\nhas not decided on the magnitude of the increase.<\/p>\n
Cutting fuel subsidies is one of the government's fiscal
\npolicies to help the slumping rupiah.<\/p>\n
The government's plans to help the rupiah, along with Bank
\nIndonesia's rate hikes twice this month, helped restore foreign
\ninvestors' confidence.<\/p>\n
Short-term government bond prices also recovered, dealers
\nsaid. The price of government bonds maturing in 2007 rose to 92.5
\nfrom 91 on Friday, a dealer said.<\/p>\n
Dealers expect that the dollar could continue to head lower,
\ntoward Rp 10,000 on Tuesday, with upside resistance at Rp 10,200.<\/p>\n
Elsewhere, shares ended higher on Monday on growing
\nexpectations that the rupiah will continue to recover after the
\ncentral bank hiked its key interest rate earlier this month,
\ndealers said.<\/p>\n
The stronger rupiah could ease debt service costs of many
\nIndonesian companies, paving the way for more business expansion,
\nanalysts said.<\/p>\n
\"The firmer the rupiah, the better sentiment in the equity
\nmarket will be,\" said a trader with Paramitra Securities.<\/p>\n
Analysts said investors regained their confidence after the
\ncentral bank last week raised the main interest rate to 10
\npercent from 9.5 percent.<\/p>\n
The Jakarta Stock Exchange Composite index advanced 0.7
\npercent, or 7.201 points, to 1105.657. The main index has risen
\n6.4 percent in the previous six sessions after the interest rate
\nhike.<\/p>\n
Gainers led decliners 82 to 37, with 58 stocks unchanged.<\/p>\n
Volume, however, fell to 1.33 billion shares valued at Rp 1.6
\ntrillion, compared with 2.2 billion shares valued at Rp 1.8
\ntrillion on Friday.<\/p>\n
The stronger rupiah has renewed expectations that purchasing
\npower will remain stable for the rest of the year, spurring
\nbargain hunters to buy back consumer blue chips.<\/p>\n
Automotive company Astra International rose 2.3 percent to Rp
\n11,150 and food producer Indofood advanced 5 percent to Rp 890.<\/p>\n
Bank Mandiri, the nation's largest lender by assets, ended up
\n5.2 percent at Rp 1,410 on renewed hopes that the firmer rupiah
\nwill inspire the central bank to stop increasing interest rates.<\/p>\n
Retailer Hero Supermarket jumped 25 percent to Rp 4,875 on
\nnews that Asian retailer Dairy Farm International Holdings Ltd.
\nwants to buy all Hero stock at Rp 6,351 a share through the open
\nmarket.<\/p>\n
On the downside, bellwether Telekomunikasi Indonesia fell 1.8
\npercent to Rp 5,600 on profit taking after it gained 12 percent
\nlast week.<\/p>\n
Dealers said they expect shares to continue to trade higher on
\nTuesday on followthrough buying in bank and consumer blue chips.<\/p>",
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"sponsor": "Okusi Associates",
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