Political tension haunts rupiah

Political tension haunts rupiah

Dow Jones, Jakarta

The rupiah closed slightly higher on Monday against the dollar on the U.S. unit's slide versus the yen, dealers said.

The rupiah closed at Rp 8,605 per dollar, up from its close Friday at Rp 8,620.

Dealers said the yen's strength encouraged foreign banks in Jakarta to sell the U.S. currency.

But the dollar found strong support at Rp 8,595, allegedly on bids from state-owned oil and gas company PT Pertamina, which regularly needs dollars to finance its fuel imports, dealers said.

The market also seemed reluctant to push down the dollar further as concerns over rising political tension in the run-up to the July presidential election continue to haunt the local unit.

Former security minister Susilo Bambang Yudhoyono, front- runner for the presidential election, said over the weekend he has chosen Minister of Social Welfare Yusuf Kalla as his running mate.

Kalla is a member of former president Soeharto's Golongan Karya Party, or Golkar. Golkar itself will choose its presidential candidate in a convention Tuesday.

Dealers predict the rupiah to trade between Rp 8,600 and Rp 8,620 Tuesday, with the local foreign currency market expected to track dollar/yen movements.

Meanwhile, Indonesian shares ended higher as investors bought cigarette and bank blue chips on hopes of higher first quarter net profit, dealers said.

"Late gains in these blue chip companies lifted the main index higher," said a trader with a European brokerage firm.

Dealers said many investors, however, took profit, discouraged by losses on regional markets and concerns about the local political situation ahead of the presidential election in July.

The Jakarta Stock Exchange Composite Index ended up 8.267 points, or 1.1 percent, at 784.839.

Gainers and decliners were equal at 61, with 73 stocks unchanged.

Volume was 1.9 billion shares valued at Rp 878 billion ($102 million).

Cigarette maker Gudang Garam led gainers, rising Rp 850, or 6.3 percent, to Rp 14,300 on hopes of higher first quarter sales. Its rival, Hanjaya Mandala Sampoerna, gained Rp 200, or 4.3 percent, to Rp 4,850.

Bank Mandiri, the nation's largest lender, ended up Rp 25, or 1.7 percent, at Rp 1,450 and heavyweight Bank Central Asia rose Rp 50, or 1.3 percent, to Rp 3,775.

Bank Danamon was up Rp 75, or 1.8 percent, at Rp 3,325 on a rebound after succumbing to selling pressure Friday, when the bank said it discovered some staff at its North Sumatra branch had embezzled about Rp 33 billion.

Indonesian companies are expected to start announcing first- quarter earnings early next month.

Bellwether Telekomunikasi Indonesia fell Rp 100, or 1.2 percent, to Rp 8,000 on profit-taking after rising 2.5 percent Friday.

Dealers said they expect the market to trade flat to slightly lower Tuesday on profit-taking after gaining the previous two sessions.