Rupiah closes at 12-month low, index declines

Rupiah closes at 12-month low, index declines

Dow Jones, Jakarta

The rupiah ended at its lowest level in over 12 months on
Tuesday as foreign funds, who dumped Indonesian shares last week,
bought dollars, dealers said.

The dollar closed at Rp 8,720, up from its close of Rp 8,700
Friday. The local currency market was closed Monday for a public
holiday. The last time the dollar traded around this level was
April 28, 2003.

Foreign investors unloaded Indonesian stocks last week as
concerns over China's economic tightening policies shook regional
markets. The Indonesian stock market was also clouded by fresh
sectarian clashes in the country's eastern town of Ambon.

The Jakarta Stock Exchange Index fell 3.2 percent last week,
and dropped further by 0.5 percent on Tuesday.

Bank Indonesia allegedly sold the dollar to defend the rupiah,
dealers said.

Bank Indonesia's Governor Burhanuddin Abdullah told reporters
that the central bank will continue intervening in the market.
Its goal, however, is to reduce the dollar-rupiah volatility, not
to curb the dollar below a specific level, he added.

Bank Indonesia has said in the past that it is comfortable
with a dollar level between Rp 8,200 and Rp 8,700. But Abdullah
said the dollar's current level remained tolerable.

Dealers said the dollar looks poised to test Rp 8,750
Wednesday although the central bank is expected to intervene
again. Any downward correction in the dollar is expected to be
limited at Rp 8,675, they added.

Shares ended lower for the fourth consecutive session amid
lingering local security concerns ahead of the presidential
elections, dealers said.

They said overall sentiment remained cautious and weak, amid
concerns following an explosion in Pekanbaru, Riau province,
which killed two people. The explosion could raise local security
concerns ahead of the presidential polls in July, they added.

"The market ran out of fresh leads after the long weekend,"
said a trader with a foreign brokerage. Indonesian markets were
closed on Monday for a holiday.

Dealers said many investors stayed on the sidelines to await
the outcome of the Federal Open Market Committee meeting on U.S.
interest rates later Tuesday.

The Jakarta Stock Exchange Composite Index ended down 3.810
points, or 0.5 percent at 779.603.

Decliners led gainers 65 to 42, with 83 stocks unchanged.

Volume was 959 million shares valued at Rp 916 billion ($105
million).

Gudang Garam led decliners, falling Rp 550, or 3.8 percent, to
Rp 14,050 on profit-taking, after the company said its first
quarter net profit rose only 8.5 percent on year, below market
expectations.

Also lower were nickel miner International Nickel Indonesia,
or Inco, down Rp 3,000, or 8.8 percent, at Rp 31,000, and Bank
Rakyat Indonesia, down Rp 100, or 5..8 percent, at Rp 1,625.

Indonesian Satellite Corp. and car maker Astra International
bucked the trend after they reported solid first quarter
earnings.

Indosat gained Rp 150, or 3.8 percent, to Rp 4,125 and Astra
International rose Rp 300, or 5.3 percent, to Rp 6,000.

Dealers said they expect the market Wednesday to trade flat to
slightly higher on bargain-hunting after falling 4.7 percent in
the previous four sessions.