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.