Rupiah down on corporate demand

Rupiah down on corporate demand

Dow Jones/Jakarta

The Indonesian rupiah closed down on Monday as corporate dollar demand outweighed offshore investor rupiah purchases, dealers said in Jakarta.

The dollar closed at Rp 9,820 compared with Rp 9,738 on Friday. The rupiah hit an intraday low on Monday of Rp 9,755.

"All in all we see interest in U.S. dollars from different types of domestic companies...still trying to buy more dollars for debt obligations," a dealer at a foreign bank said. "This (buying) seems geared to real demand rather than new supply purposes."

Those dollar purchases overwhelmed the influence of rupiah- buying by offshore investors seeking shares in Indonesia's surging stock market. The Jakarta index is the region's best performer this year and is attracting increasing interest from overseas.

A dealer said the rupiah lost traction, particularly against massive dumping of the currency by a domestic corporation seeking to convert US$300 million in rupiah from recent share sales into the U.S. dollars.

"All proceeds from the sales are in rupiah and the company is gradually buying dollars in tranches to repay dollar debts," the dealer said. "I think that puts a lot of pressure on the rupiah."

Dealers expect the rupiah to trade between Rp 9,750 and Rp 9,825 on Tuesday. -- Dow Jones