Rupiah boosted by dolar's slide against major rivals
Rupiah boosted by dolar's slide against major rivals
Dow Jones, Jakarta
The rupiah ended higher on Wednesday as offshore market participants unwound some of their long-dollar positions after the U.S. unit lost ground against major rivals, dealers said.
The dollar closed at Rp 9,480 down from its close on Tuesday at Rp 9,495.
"The rupiah was helped by dollar-unwinding across Asia after the dollar lost ground against major rivals," a dealer with a foreign bank said.
Dealers said that local companies, especially importers, took advantage of the dollar's slide to accumulate the currency, which in turn helped to slow it's decline.
Bank Indonesia was not detected in the market on Wednesday, dealers said. Bank Indonesia has allegedly unloaded dollars in the spot market to help the rupiah.
The nation's central bank, however, moved on Wednesday in the money market by rising the benchmark weighted average rate of its one-month Sertifikat Bank Indonesia, or SBI notes, to 7.53 percent from 7.44 percent in a twice-monthly auction.
The magnitude of the rate hike is bigger than the usual 1-to-2 basis points in the past few months.
Although the rate hike was intended to stem rising inflation, it's expected to help make the rupiah more attractive.
Dealers expect the dollar to trade between Rp 9,455 and Rp 9,490 on Thursday.
Meanwhile on the stock market, Jakarta shares ended higher led by sharp gains in oil and gas producer Medco Energi on news that the company plans to sell up to a 40 percent stake on the London Stock Exchange in July, dealers said.
They said the market shrugged off news that the central bank raised its key interest rate to 7.53 percent from 7.44 percent, aimed at fighting rising inflation and defending the rupiah.
"The increase in interest rates was within market expectations, so it didn't hurt sentiment much," said an analyst with a foreign securities firm.
The Jakarta Stock Exchange Composite Index ended up 6.762 points, or 0.6 percent, at 1103.29.
Gainers led decliners 95 to 36, with 62 stocks unchanged.
Volume was 1.10 billion shares valued at Rp 1.00 trillion, compared with 1.30 billion shares valued at Rp 1.04 trillion on Tuesday.
Medco Energi led gainers on expectations that the stock will be sold at premium. Medco jumped 12 percent to Rp 3,250.
Dealers said investors also bought other oil-related companies on expectations of improved 2005 performance due to higher oil prices.
Medco's rival Petrosea leapt 12 percent to Rp 5,000 and offshore oil shipping service provider Rig Tenders added 4.2 percent to Rp 1,000.
Also higher was crude palm oil producer Astra Agro Lestari, which rose 3.95 percent to Rp 3,975 on a rebound and expectations of solid first-quarter earnings.
Dealers said investors, however, continued to sell several bank stocks on expectations that higher interest rates will reduce the banks' net interest margins and push up the cost of funds.
Bank Danamon fell 1 percent to Rp 4,750 and Bank Lippo dropped 1.2 percent to Rp 810.
Dealers expect the market to trade higher on Thursday on follow-through buying in shares of oil-related companies.