Rupiah ends higher to continue recovery

Rupiah ends higher to continue recovery

Dow Jones, Jakarta

The rupiah continued recovering on Wednesday as foreign investors
exchanged dollars to settle their recent purchases of local
bonds, dealers said.

The dollar dipped briefly below the Rp 10,000 mark earlier in
the day, touching Rp 9,990. It was the dollar's lowest level
since Aug. 22. The greenback ended at Rp 10,005 versus its close
on Tuesday at Rp 10,075.

"The dollar's dip below Rp 10,000 could be an early signal
that the rupiah crisis is over," a dealer with a foreign bank
said. "It most likely will try to make a clean break below Rp
10,000 tomorrow."

Foreign investors came in large numbers recently, snapping up
undervalued government bonds after the government and the central
bank took steps to support the rupiah, including raising interest
rates and making plans to cut fuel subsidies.

Dealers, however, said profit-taking drove bonds prices
slightly lower on Wednesday. Still, they expect the profit-taking
to ease in the coming days.

Dealers expect the dollar to trade between Rp 9,990 and
Rp 10,020 on Thursday.

Meanwhile, the shares ended sharply lower on Wednesday, led by
selling in bellwether Telekomunikasi Indonesia (Telkom) on
renewed expectations that its 2005 earnings will be eroded by
foreign exchange losses brought about by the weak rupiah, dealers
said.

They said news that the government will likely hike fuel
prices significantly early next month continued to discourage
investors, as it could push up the operating costs of many
Indonesian companies, hurting their 2005 earnings.

"Investors also fear the fuel price hikes could spur students
and other people to stage demonstration," said a trader with a
local securities firm.

The Jakarta Stock Exchange Composite index ended down 2.5
percent, or 27.117 points, at 1058.627.

Decliners led gainers 98 to 25, with 70 stocks unchanged.

Volume fell to 1.25 billion shares valued at Rp 1.2 trillion,
compared with 1.4 billion shares valued at Rp 1.3 trillion on
Tuesday.

Telkom fell 4.7 percent to Rp 5,050, on expectations it will
book a lower net profit for 2005 on increased foreign exchange
losses. Telkom has debts of around US$750 million, analysts said.

Dealers said worries over fuel price increases also hit
automotive company Astra International, which lost 3.6 percent to
end at Rp 10,650, and consumer goods producer Unilever Indonesia,
which ended down 5.6 percent at Rp 3,825.

Shares in nickel miner International Nickel Indonesia, or
Inco, bucked the trend, rising 1 percent to Rp 14,600 on bargain
hunting after recent falls from profit taking.

Dealers said they expect shares to trade slightly higher
Thursday on bargain hunting following a drop of 4.3 percent on
the main index over the previous two sessions.