Rupiah up on plan to cut fuel subsidies<\/p>\n
Bloomberg, Jakarta<\/p>\n
The rupiah rose for a fifth day after the government said it may
\nincrease fuel prices in October to cut energy subsidies.<\/p>\n
The plan to reduce subsidies that are threatening efforts to
\nnarrow the budget deficit helped the rupiah rise from a four-
\nyear low reached on Aug. 30. Record crude oil prices have led to
\nsurging demand for dollars, weighing on the currency.<\/p>\n
\"Sentiment for the rupiah has been recovering,\" said Tetsuo
\nYoshikoshi, market analyst of the Treasury unit in Singapore at
\nSumitomo Mitsui Banking Corp., a branch of Japan's third-biggest
\nlender. \"A subsidy cut will reduce the deficit and help decrease
\ndemand for oil.\"<\/p>\n
The rupiah rose 0.8 percent to 9,928 to the dollar as of 5:17
\np.m. in Jakarta. The currency may advance to 9,800 by the end of
\nthis month, Yoshikoshi said.<\/p>\n
\"If we increase by October, the minimum is going to be 5
\npercent\" and fuel prices will be raised gradually to cover costs
\nwithin 36 months, State Minister of National Development Planning
\nSri Mulyani Indrawati said earlier this week.<\/p>\n
Meanwhile, stocks fell for a third day. Bellwether PT
\nTelekomunikasi Indonesia (Telkom) led the decline after oil
\nprices surged the most this month, adding to concern the
\ngovernment may boost fuel prices more than expected to cut its
\nsubsidy bill.<\/p>\n
\"Oil is at the heart of the nervousness in the market,\" said
\nAlvin Pattisahusiwa, who helps manage the equivalent of $287
\nmillion at Fortis Investments in Jakarta. \"As long as oil's going
\nup, then those concerns are going to stay.\"<\/p>\n
The Jakarta Composite Index fell 7.72, or 0.7 percent, to
\n1050.90 at the 4 p.m. close, after earlier rising as much as 0.3
\npercent. Seven stocks dropped for every four that gained.<\/p>\n
The benchmark has slumped 12 percent from a record high on
\nAug. 3 as surging oil prices have prompted the government to
\nconsider cutting fuel subsidies to avoid a budgetary crisis.
\nIndonesia is the only member of OPEC that is a net oil importer.<\/p>\n
Telkom, Indonesia's largest phone company, dropped Rp 50, or 1
\npercent, to Rp 5,000 on concern higher fuel costs will damp
\nconsumer spending and boost operating costs. PT Astra
\nInternational, the nation's biggest auto retailer, lost Rp 350,
\nor 3.3 percent, to Rp 10,300. PT Unilever Indonesia, the local
\nunit of the world's biggest manufacturer of food and soap,
\ndeclined Rp 25, or 0.7 percent, to Rp 3,800.<\/p>\n
Elsewhere, PT International Nickel Indonesia (Inco) climbed Rp
\n400, or 2.7 percent, to Rp 15,000 after analysts at PT Danareksa
\nSekuritas said the company's dividend yield will support share
\nprices. It has a dividend yield of 3.1 percent compared with a
\nyield of 2 percent for the Morgan Stanley Capital International
\nAsia-Pacific Index, a regional benchmark.<\/p>\n
The government on Sept. 13 asked International Nickel, a unit
\nof Canada's Inco Ltd., to raise royalty payments to the state by
\nas much as 2 percent if the miner goes ahead with an expansion
\nplan, Investor Daily Indonesia said, citing an energy ministry
\nofficial.<\/p>\n
\"The management's decision to agree on the higher royalty
\npayment for the new project should smooth the process of
\nobtaining approval,\" Jakarta-based Danareksa said in a note to
\nclients on Thursday. Its \"attractive dividend yield provides a
\ncushion for the share price.\"<\/p>",
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