Rupiah ends at 18-month low on corporate dollar demand

Rupiah ends at 18-month low on corporate dollar demand

Dow Jones, Jakarta

The rupiah closed at an 18-month low Monday on dollar demand
from local companies to pay their month-end offshore obligations,
dealers said.

The dollar closed at Rp 9,125, up from its close Friday at Rp
9,070. It was the U.S. currency's highest closing level since
Nov. 11, 2002, when it ended at Rp 9,145.

Dealers said that local companies bought dollars to pay
maturing debts. Some local companies also bought the U.S. unit to
hedge their debts maturing within six months as they expect
political uncertainties surrounding the July presidential
election to weaken the rupiah.

"Some companies started to hedge their debts as they expect a
weaker rupiah in the medium term," a dealer with a foreign bank
in Jakarta said.

Indonesian voters for the first time will directly elect the
president and vice president July 5 from five pairs. Analysts
expect that none of them will get more than 50 percent of votes
in the first election, which is expected to be followed by a
second runoff Sept. 20.

Dealers said that Bank Indonesia was suspected of selling
dollars in the market Monday to help the rupiah, but with little
success.

The market shrugged off news of 4.46 percent on-year economic
growth during the first quarter of the year, which was slightly
higher than economists' average expectation of 4.32 percent. The
local currency market more often moves on political news, and
genuine demand, rather than economic data.

Meanwhile, shares ended higher Monday led by select blue chips
and helped by gains in many Asian markets, dealers said.

Overall sentiment, however, remained cautious due to the
weakness of the rupiah, which spurred many investors to swiftly
take profit after gains in the previous three sessions, they
said.

"Concerns over the rupiah capped buying," said a trader with
Mandiri Sekuritas.

The Jakarta Stock Exchange's main index ended up 7.648 points,
or 1.1 percent, at 732.580.

Gainers led decliners 57 to 51, with 78 stocks unchanged.

Volume was 985 million shares valued at Rp 825 billion
(US$90.4 million).

Bellwether Telekomunikasi Indonesia gained Rp 100, or 1.3
percent, to Rp 7,600 after its American Depositary Receipts in
New York Friday rose 0.5 percent to $16.95.

Telkom's rival Indonesian Satellite Corp. rose Rp 75, or 2
percent, to Rp 3,875 after its ADRs rose 7.6 percent to $21.63.

Also higher were shares in cigarette maker Gudang Garam, which
gained Rp 250, or 1.8 percent, to Rp 13,900 on expectations of
higher first half sales.

Profit-taking hit shares in cement maker Indocement Tunggal
Prakarsa which dropped Rp 50, or 3.4 percent, to Rp 1,425 and
Bank Negara Indonesia which fell Rp 50, or 4.3 percent, to Rp
1,125.