Rupiah ends higher on capital inflows

Rupiah ends higher on capital inflows

Dow Jones, Jakarta

The Indonesian rupiah ended higher on Friday on capital inflows
in the local bond market as Bank Indonesia's rupiah support-
policies gave some level of comfort to foreign investors, dealers
said.

The dollar closed at Rp 10,215, down from Rp 10,360 on
Thursday.

The rupiah-support measures that Bank Indonesia announced
earlier this week include a 50-basis point hike in the benchmark
BI rate to 10 percent, a ban on dollar-rupiah margin trading and
tighter control on commercial banks' dollar-rupiah net open
positions.

"Most dollar offers came from foreign names today," a dealer
with a European bank in Jakarta said.

Dealers said London-based investors likely bought government
bonds on the secondary market as prices have gone lower due to
the current wave of redemption in mutual funds, sparked by rising
local interest rates.

Some dealers said foreign market participants also sold
dollars likely because they wanted to buy shares of the country's
second largest lender, PT Bank Central Asia, later this month.

The government is expected to sell its remaining 5 percent
stake in the bank by end-September, in a deal expected to raise
around US$200 million.

Dealers expect the dollar to trade between Rp 10,100 and Rp
10,300 on Monday, with the market watching oil prices on the
global market.

The market is also still waiting for further measures from the
government on its fuel subsidy policy, dealers said.

Elsewhere, shares ended higher for the fourth consecutive
session on Friday on further bargain-hunting as the rupiah
continued to recover against the U.S. dollar, dealers said.

"The firmer rupiah has renewed expectations that the nation's
economy this year will expand as targeted," said a trader with a
local securities firm.

The government expects the economy to expand by 6 percent this
year, compared with 5 percent in 2004.

Analysts said investors regained their confidence after the
central bank early this week announced a package of monetary
policies, which include moves to start increasing interest rates
and plans to reduce fuel subsidies.

The Jakarta Stock Exchange Composite index advanced 1.7
percent, or 18.006 points, at 1098.456.

Gainers led decliners 77 to 39, with 60 stocks unchanged.

Volume rose to 2.2 billion shares valued at Rp 1.8 trillion,
compared with two billion shares valued at Rp 1.8 trillion on
Thursday.

Leading gainers, bellwether Telekomunikasi Indonesia (Telkom)
jumped 4.6 percent to Rp 5,700 after its American depositary
receipts in New York rose 5.1 percent and on expectations of
solid nine-month earnings due to an increase in revenue from
cellular services.

Automotive company Astra International rose 4.8 percent to Rp
10,900 on expectations that it will maintain solid 2005 car sales
if the rupiah continues to strengthen.

Food company Indofood Sukses Makmur advanced 7.6 percent to Rp
850 on expectations that the company will soon name an
underwriter for a plan to sell up to a 15 percent stake in flour
mill unit Bogasari Flour Mills later this year.

On the downside, nickel miner International Nickel Indonesia,
or Inco, dropped 3.2 percent to Rp 15,000, on profit-taking after
gains over the previous four sessions due to expectations of
solid 2005 earnings.

Dealers said they expect shares to continue to trade higher
Monday, led by further buying in telecommunications blue chips.