Indonesia Rupiah ends op on reported IBRA dollar selling
Indonesia Rupiah ends op on reported IBRA dollar selling
JAKARTA (Dow Jones) : The rupiah ended slightly higher Friday as the government's Indonesian Bank Restructuring Agency, or IBRA, reportedly sold dollars to help the local unit.
The dollar was quoted between Rp9,410 and Rp9,430 in late Asian trade Friday, a little lower than Rp9,425 to Rp9,470 late Thursday.
The dollar fell as Holdiko - the IBRA unit charged with managing assets formerly belonging to the Salim Group - sold US$50 million, traders said.
IBRA sold a number of Salim assets this year and last year to foreign investors, but didn't immediately transfer the proceeds into rupiah.
Players that were long dollars cut those positions on the IBRA selling and feared central bank intervention in thin pre-weekend trade. In the event, the central bank didn't sell dollars in the market Friday, traders said.
But the market is likely to remain bullish toward the dollar next week, they added. High dollar demand from local corporates for foreign debt repayment and to fund imports supported the U.S. currency at its day low of Rp9,350.
Next week, the dollar is likely to move in a Rp9,350-Rp9,650 range.
An escalation of tensions between Afghanistan and the U.S., however, could break the pair out of this range, traders said.
Traders remain unsure how the rupiah would move on a U.S. strike on Osama bin Laden's bases in Afghanistan in retaliation for last week's terrorist attacks.
Indonesia has the world's largest number of Muslims and some militant groups have said they will attack U.S. interests in the country if the U.S. hits Afghanistan. Such actions would push the dollar higher.
However, these elements represent a minority in Indonesia, with President Megawati Soekarnoputri reaffirming in her meeting with President George Bush this week in Washington that Jakarta stands ready to fight terrorism.
Events in Pakistan failed to move the rupiah Friday, as the market focused on debt repayment issues and IBRA dollar selling.
In Islamabad, Afghanistan's envoy to Pakistan said Friday his country wouldn't hand over Osama bin Laden to the U.S. without evidence of his involvement in the terrorist attacks.
Indonesia's overnight rate stood at a lower-than-normal 15.25% Friday, unchanged from Thursday. The rate fell this week after the central bank threw out about half the bids for its weekly one-month note auction, leaving the interbank market awash with liquidity.
Although this seems to point to lower rates, analysts said the central bank is unlikely to push yields lower in coming weeks amid fears the rupiah could move lower on debt repayment outflows. A weak rupiah this year has pushed up the cost of imported goods, making inflation a constant worry.