Rupiah ends lower on dollar demand from firms

Rupiah ends lower on dollar demand from firms

Dow Jones, Jakarta

The rupiah ended lower on Wednesday as local companies continued buying dollars to pay maturing offshore obligations at the end of the month, dealers said.

The dollar closed at Rp 9,010, up from its close on Tuesday at Rp 8,980.

The central bank was said to have sold the dollar to slow its rise, but the authorities failed to keep the U.S. unit below the psychologically-important level of Rp 9,000.

Dealers expect demand from local companies will likely keep the dollar above Rp 9,000 until the end of the month. Local firms are saddled with over US$60 billion in offshore borrowing and payment of such maturing debt usually weighs on the rupiah.

Dealers added that most players remain cautious in building fresh positions due to lingering political uncertainties in the run-up to the second round of presidential elections on Sept.20.

Incumbent President Megawati Soekarnoputri is widely expected to face market-favorite Susilo Bambang Yudhoyono in the September poll after the first-round election earlier this month failed to produce an outright winner.

Dealers expect the dollar to trade between Rp 8,990 and Rp 9,025 on Thursday.

Meanwhile, shares ended marginally higher Wednesday on a rebound, with gains across Asian markets providing support, dealers said.

"Buying, however, wasn't that aggressive," said a trader with a local securities firm. She added that many investors stayed on the sidelines given the prolonged political uncertainty ahead of September's second round of presidential polls.

The Jakarta Stock Exchange's composite index ended up 4.572 points, or 0.6 percent, at 761.239.

Gainers led decliners 55 to 35, while 86 stocks were unchanged. Volume was 1.6 billion shares valued at Rp 969 billion.

Telecommunication and bank blue chips were among the gainers.

Index heavyweight Telekomunikasi Indonesia rose Rp 150, or 2 percent, to Rp 7,850 and Indonesian Satellite Corp. added Rp 100, or 2.4 percent, at Rp 4,275.

Dealers said buying in telecom shares was on expectations of higher first half earnings. The two telecoms companies are expected to announce their first half results early next month.

Also higher were shares of Bank Mandiri, Indonesia's largest lender, up Rp 25, or 2.1 percent, at Rp 1,250, and Bank Danamon, up Rp 75, or 2.4 percent, at Rp 3,225.

Shares of cigarette maker Hanjaya Mandala Sampoerna ended down Rp 100, or 1.7 percent, at Rp 5,700 and its rival Gudang Garam fell Rp 50, or 0.4 percent, to Rp 14,000.

Dealers said they expect the market on Thursday to trade slightly higher on a further rebound.