Rupiah ends lower on Astra, Telkom sell-off

Rupiah ends lower on Astra, Telkom sell-off

Dow Jones/Jakarta

The Indonesian rupiah closed down on Monday as corporate dollar demand outweighed offshore investor rupiah purchases, dealers said.

The dollar closed at Rp 9,820 compared with Rp 9,738 on Friday. The rupiah hit an intraday low on Monday of Rp 9,755.

"All in all we see interest in U.S. dollars from different types of domestic companies...still trying to buy more dollars for debt obligations," a dealer at a foreign bank said. "This (buying) seems geared to real demand rather than new supply purposes."

Those dollar purchases overwhelmed the influence of rupiah- buying by offshore investors seeking shares in Indonesia's surging stock market. The Jakarta index is the region's best performer this year and is attracting increasing interest from overseas.

A dealer said the rupiah lost traction, particularly against massive dumping of the currency by a domestic corporation seeking to convert US$300 million in rupiah from recent share sales into the U.S. dollars.

"All proceeds from the sales are in rupiah and the company is gradually buying dollars in tranches to repay dollar debts," the dealer said. "I think that puts a lot of pressure on the rupiah."

Dealers expect the rupiah to trade between Rp 9,750 and Rp 9,825 on Tuesday.

Indonesian shares ended lower on Monday led by further selling in automotive company Astra International and bellwether Telekomunikasi Indonesia, dealers said.

"Falls in Astra and Telkom hurt overall sentiment, spurring further profit taking after the main index hit a record high last week," said a trader with a foreign securities firm.

Dealers said growing worries over the high interest rate and the volatility of the rupiah also added to negative sentiment.

The Jakarta Stock Exchange's Composite Index fell 0.8 percent, or 15.504 points, to 1158.586.

Decliners led gainers 89 to 23, with 83 stocks unchanged. Volume rose to 1.4 billion shares valued at Rp 1.25 trillion, compared with 1.23 billion shares valued at Rp 1.1 trillion on Friday.

Astra International lost 4.5 percent to Rp 11,800 on expectations of lower 2005 sales as the high interest rate could prevent people from buying cars through bank loans.

Analysts expect the benchmark one-month interest rate of Bank Indonesia notes to hit 9.5 percent by the end of the year, compared with 8.5 percent at present, due to rising inflation.

Bellwether Telekomunikasi Indonesia lost 2.7 percent to Rp 5,350 on worries that the company may review its listing on the New York Stock Exchange due to the high cost.

Traders also attributed selling in Telkom to worries that Telkom will face stiffer competition from the entrance of foreign telecommunication companies. Hong Kong's Hutchison Telecommunications International Ltd. has said that it plans to acquire a stake in an Indonesian telecommunications company later this year.

Profit taking also hit cement maker Semen Gresik, which fell 4.3 percent to Rp 18,000 on expectations of lower 2005 sales as the weak rupiah is seen reducing consumer spending.

Dealers said they expect Indonesian shares to rebound on Tuesday on bargain hunting after the main index fell in the previous three sessions.