Rupiah ends at new low, minister's remark ignored
Rupiah ends at new low, minister's remark ignored
Dow Jones/Jakarta
The Indonesian rupiah slipped to yet another fresh 41-month low against the dollar on Tuesday as foreign investors exited the local capital market, dealers said.
The market ignored Finance Minister Jusuf Anwar's remark that he expected the rupiah to recover.
The dollar closed at Rp 10,095 versus Rp 10,030 on Monday. This is the dollar's highest close since March 1, 2002, when it closed at Rp 10,103.
The greenback briefly touched an intraday high of Rp 10,130 in afternoon trade, but suspected intervention by Bank Indonesia pulled the unit off its peak, dealers said.
Dealers said Bank Indonesia sold dollars in the market but the intervention only helped the rupiah a little.
"Dollar demand was healthy, mostly coming from foreign investors who recently sold Indonesian stocks," a dealer with a foreign bank said.
The Jakarta Stock Exchange's main index dropped nearly 1 percent Tuesday, bringing its total loss to 10.7 percent since the beginning of the month.
Foreign investors have been selling local stocks as rising oil prices weakened the rupiah. Foreign investors' move to exchange rupiah into dollars to take their funds out of the country further pushed the local unit lower.
Minister of Finance Anwar earlier said the rupiah may yet strengthen against the greenback but didn't mention when he expected the local unit to appreciate. Anwar added that the impact of the rupiah's weakness on the state budget remains manageable.
"Dollar buying from foreign investors may ease Wednesday as local stocks are expected to rebound," a dealer with a local company said.
Dealers in the stock market expect bargain hunters to only jump into the market Wednesday if the rupiah is stable around current levels.
Dealers expect the dollar to trade between Rp 10,050 and Rp 10,125 on Wednesday.
Indonesian shares ended lower for the eighth consecutive session Tuesday as the U.s. dollar briefly topped Rp 10,100, exacerbating fears Indonesia's economy won't grow as expected this year, dealers said.
After hitting a 41-month high of Rp 10,120 on Tuesday, the dollar was trading at Rp 10,095 at 0900 GMT, compared with its previous close of Rp 10,030, on rising dollar demand from local companies to repay dollar-denominated debts by the end of the month.
The Indonesian Government expects the economy to expand by 6 percent this year, compared with 5 percent in 2004.
"Selling pressure continued on lingering worries that the weaker rupiah could hurt 2005 economic growth," said a trader with Kuo Capital Securities.
The Jakarta Stock Exchange's Composite Index ended 1 percent lower, or 10.261 points, at 1066.092. The main index has fallen nearly 11 percent since it hit an all-time high of 1192.203, on August 3.
Decliners led gainers 97 to 36, with 56 stocks unchanged. Volume rose to 4.6 billion shares valued at Rp 1.2 trillion, compared with 1.2 billion shares valued at Rp 963 billion on Monday.
Dealers said consumer and bank blue chips were the hardest hit by the weaker rupiah, which could weaken purchasing power and force the central bank to continue to increase key interest rates.
Cigarette maker Gudang Garam dropped 3.5 percent to Rp 11,000, and cement maker Semen Gresik lost 5.5 percent to Rp 17,100, with weaker purchasing power expected to hurt the companies' 2005 sales.
Bank Mandiri, the nation's largest bank by assets, lost 2.6 percent to Rp 1,510. Bank Rakyat ended 4.7 percent lower at Rp 2,550, and Bank Panin was down 3.2 percent at Rp 460.
Pharmaceutical company Kalbe Farma ended down 3.5 percent at Rp 830, on fears the weaker rupiah could increase the cost of imported raw materials.
Dealers said they expect Indonesian shares to trade flat to slightly higher on Tuesday on bargain hunting after recent sharp falls.