Rupiah ends higher on dollar's slide

Rupiah ends higher on dollar's slide

Dow Jones, Jakarta

The rupiah closed higher Wednesday, benefiting from the dollar's weakness against most regional units, dealers said.

The dollar closed at Rp 9,505, down from its close on Tuesday at Rp 9,545 tracking its loss against the Japanese yen.

Dealers said Bank Indonesia sold dollars via state banks to help prop up the local unit.

But the amount was likely small, as trading volume thinned out ahead of a public holiday on Thursday.

The market welcomed an increase in Bank Indonesia's one-month Sertifikat Bank Indonesia notes to 7.81 percent in a weekly auction Wednesday from 7.70 percent.

The increase is expected to discourage capital outflows.

The magnitude of the rate hike, however, was slightly less than the 15-20 basis point increase predicted by Bank Indonesia Governor Burhanuddin Abdullah last week.

"The rate hike should help make the rupiah more attractive," a dealer with a local bank said.

Dealers expect the dollar to trade between Rp 9,490 and Rp 9,525 on Friday.

Meanwhile on the stock market, Indonesian shares ended higher led by bargain-hunting in telecommunications and bank blue chips, with a firmer rupiah against the U.S. dollar providing support, dealers said.

Gains in several Asian markets after a slightly firmer close on Wall Street overnight following the Federal Reserve's interest-rate increase also helped support buying, dealers added.

The Jakarta Stock Exchange Composite Index added 16.08 points, or 1.6 percent, to 1049.58.

Gainers led decliners 117 to 28, with 43 stocks unchanged.

Volume was 1.3 billion shares valued at Rp 1.2 trillion, compared with 860 million shares valued at Rp 938 billion on Tuesday.

Telekomunikasi Indonesia rose 3 percent to Rp 4,300 on expectations of a higher 2004 dividend and bargain-hunting after sharp falls in the previous four sessions due to weak first- quarter earnings.

Telkom's rival Indonesian Satellite gained 4.6 percent to Rp 4,575 on expectations that it will issue dollar bonds later this year.

Bank Mandiri, the nation's largest lender by assets, advanced 1.9 percent to Rp 1,650 and rival Bank Central Asia jumped 3.2 percent to Rp 3,225.

Investors also bought back shares in cement producers on expectations of an improved 2005 performance due to rising local cement demand, dealers said.

Cement maker Semen Gresik jumped 4.5 percent to Rp 16,400 after the company reported solid first-quarter earnings. Gresik's rival Indocement Tunggal Prakarsa added 6.7 percent to Rp 2,800.

Bucking the trend, nickel miner International Nickel Indonesia, or INCO, lost 1.4 percent to Rp 13,800 on profit- taking after gains in the previous two sessions.

Dealers expect the market to trade higher Friday on follow through buying in telecommunications blue chips.

"The market regained its ground and many expect that the main index could return to 1,100 level later this month," said a trader with a European securities firm.