Rupiah ends down on bird flu, dollar demand

Rupiah ends down on bird flu, dollar demand

Dow Jones, Jakarta

Rupiah closed lower on Monday following reports of an outbreak of bird flu in the country. The rupiah ended at Rp 8,460 per U.S. dollar, down from Friday's close of 8,408.

Officials here on Sunday confirmed an outbreak of bird flu among millions of chickens, but said the disease hadn't spread to humans. The news prompted Japan on Monday to suspend chicken meat imports from Indonesia.

Dealers said that although the poultry industry accounts for only a fraction of Indonesia's economy, the spreading of the bird flu to Indonesia prompted offshore market players to offload excess long rupiah positions.

Economists reckoned that livestock contributed less than 2 percent to Indonesia's gross domestic product in the third quarter of 2003.

The rupiah was also weighed down by corporate dollar demand, dealers said, ahead of offshore debt repayments at the month-end.

Local companies are saddled by around US$60 billion in offshore debts.

Bird flu concerns and dollar demand from local companies are expected to push the rupiah down to Rp 8,480 on Tuesday, dealers said.

Separately, shares ended higher, with late buying in bank and telecommunications blue chips pushing the main index into positive territory, dealers said.

Overall sentiment, however, was weak following news on the bird flu outbreak, which prompted investors to take profit in many other blue chips and small stocks, dealers said.

After staying in the negative territory for most of the session, the Jakarta Stock Exchange Composite Index ended up 0.995 point, or 0.1 percent, at 786.874, rebounding from an intra-day low of 776.394.

Decliners, however, led gainers 86 to 49, with 78 stocks unchanged.

Volume was 1.5 billion shares valued at Rp 801 billion rupiah.

Bellwether Telekomunikasi Indonesia rose Rp 100, or 1.3 percent, to Rp 8,050 on hopes it will complete the reaudit of its 2002 accounts later this week.

Dealers said investors also bought shares in several banking blue chips due to an improved business outlook following a fall in interest rates.

Bank Mandiri, the nation's largest bank, rose Rp 75, or 5.3 percent, to Rp 1,500, and heavyweight Bank Central Asia gained Rp 125, or 3.4 percent, at Rp 3,800.

Profit-taking hit mostly blue chips, with cigarette maker Hanjaya Mandala Sampoerna leading the decliners.

Sampoerna dropped Rp 200, or 2.9 percent, to Rp 5,000, and its rival Gudang Garam fell Rp 100, or 0.6 percent, to Rp 15,600.

Shares in second-line poultry companies succumbed to selling pressure on concerns that the bird flu outbreak in the country will hurt the companies' performance.

Shares in Charoen Pokphand Indonesia lost Rp 20, or 6.2 percent, to Rp 305, while Japfa Comfeed Indonesia fell Rp 15, or 5.6 percent, to Rp 255. Sierad Produce was down Rp 5, or 11 percent, at Rp 45.

Dealers said they expect the market on Tuesday to trade flat to slightly higher, with concerns over the bird flu disease likely to cap gains.