Rupiah ends down on dollar demand

Rupiah ends down on dollar demand

Dow Jones, Jakarta

The Indonesian rupiah lost further ground and closed lower on
Tuesday as dollar demand from local importers continued to weigh
on the local unit, dealers said.

The dollar closed at Rp 9,825, up from Rp 9,810 on Monday.

Indonesia's imports have been rising steadily since last year
as business activities pick up amid an improving domestic
political climate. The increase in imports, however, is
depressing the rupiah, as exports growth is still relatively
slower.

Also, capital inflows are declining, with an absence of sales
of state assets.

Dealers said the rupiah could get a boost from the planned
purchases of shares in Lippo Bank and Bank Buana by investors
from Malaysia and Singapore for a combined value of around US$620
million. The purchases could add dollar supply to the market when
the deals are settled.

Still, analysts widely expect high global oil prices and
rising interest rates in the U.S. to continue to weigh on the
rupiah.

Finance Minister Jusuf Anwar said late Monday that the rupiah,
which has averaged Rp 9,412 to the dollar in the January-to-June
period, is unlikely to appreciate significantly in the second
half of the year. This makes the Rp 9,300-to-a-dollar assumption
in the 2005 state budget unrealistic.

Dealers expect the dollar to trade between Rp 9,790 and Rp
9,840 on Wednesday.

Meanwhile, Indonesian shares ended marginally higher on
Tuesday, with a rebound in bank blue chips keeping the main index
in positive territory, dealers said.

However, a trader with Andalan Artha Advisindo said that
overall sentiment remained cautious, weighed down by lingering
concerns over the volatility of the rupiah and a suspected bird-
flu outbreak in the capital.

Bird flu has been suspected in the deaths of three people in
Indonesia.

The Jakarta Stock Exchange's Composite Index ended up 3.577
points, or 0.3 percent, at 1132.017. The main index had fallen
0.8 percent over the previous two sessions.

Gainers beat decliners 69 to 46, with 79 stocks unchanged.
Volume was 1.7 billion shares valued at Rp 981 billion, compared
with 1.55 billion shares valued at Rp 957 billion on Monday.

Bank Mandiri, the nation's largest lender by assets, rose 2.7
percent to Rp 1,530 on expectations of improved first-half
earnings, rebounding after falls in the previous three sessions.

Bank Negara Indonesia, the nation's third largest lender by
assets, gained 1.8 percent to Rp 1,670 on expectations that the
government will soon name an adviser and underwriter for its plan
to sell a stake of up to 30 percent in the bank later this year.

Bank Lippo rose 0.7 percent to Rp 1,480 on further buying
after news that the Swissasia consortium sold a 52 percent stake
in the bank to Malaysia's Khazanah. Bank Rakyat Indonesia rose
0.9 percent to Rp 2,975 on bargain hunting after sharp falls on
Monday.

Dealers said gas and oil producer Medco Energi continued to
succumb to selling pressure after it announced plans to sell a 30
percent stake via a global depositary receipt issue at current
prices. Medco said an application has been made to list the GDSs
in Luxembourg and to trade in London and on Nasdaq's Portal
market. Medco dropped 2.9 percent to Rp 3,300.

Dealers said they expect Indonesian shares to trade slightly
higher on Wednesday on further buying in bank blue chips.