Rupiah ends lower on oil imports
Rupiah ends lower on oil imports
Dow Jones, Jakarta
The rupiah closed lower on Thursday due to what dealers
attributed to state oil and gas firm PT Pertamina's re-entry into
the currency market to purchase dollars for oil imports.
The dollar closed at Rp 9,823, compared with Rp 9,770 on
Wednesday. The dollar hit a high of Rp 9,825 during intraday
trading.
The rupiah opened higher at Rp 9,755 as the market tracked a
rising Japanese yen against the U.S. dollar and as corporate
bought rupiah to fund tax obligations that come due Friday.
But the rupiah's strength withered under the pressure of oil
import-related dollar-buying, traders said.
"I heard that there was some dollar purchasing by Pertamina,
and that weighed on the rupiah," a dealer at a foreign bank said.
Pertamina's return to the currency market to fund oil imports
indicates that a Bank Indonesia move in July to directly supply
the firm with dollars for oil purchases cannot cope with the
combination of surging domestic fuel demand and record-high crude
oil prices hovering around US$60 per barrel.
September prices for Nymex crude are down 36 U.S. cents on
Thursday to $64.54 per barrel.
Analysts and government officials have blamed Pertamina's
voracious dollar appetite for a 5 percent decline in the rupiah
against the dollar since the start of 2005.
Central bank intervention to support the rupiah has cost the
government about $5 billion this year, or 14 percent of total
foreign-exchange reserves. Bank Indonesia hiked its benchmark
rate on Tuesday to 8.75 percent from 8.50 percent to tame the
inflation that has exacerbated the rupiah's weakness.
Dealers said the rupiah will continue to lose traction against
the rupiah on Friday if Pertamina returns to the currency market
to buy dollars.
"With oil prices going steadily higher, Pertamina's demand
will weigh on the rupiah," a dealer said.
Dealers expect the dollar to trade between Rp 9,780 and Rp
9,830 on Friday.
Meanwhile, shares ended lower on Thursday, led by selling in
automotive company Astra International and PT Telekomunikasi
Indonesia (Telkom).
Dealers said news that the government plans to hike fuel
prices early next year hurt overall sentiment, spurring swift
profit taking in most blue chips after gains in the previous two
sessions.
"There were fears high fuel prices could push up cost of
operations and hurt net profit of many companies," said a trader
with a local securities firm.
The Jakarta Stock Exchange's Composite Index fell 0.8 percent,
or 8.866 points, to 1167.962.
Decliners led gainers 89 to 32, with 76 stocks unchanged.
Volume fell to 1.5 billion shares valued at Rp 1.2 trillion,
compared with 1.8 billion shares valued at Rp 1.5 trillion on
Wednesday.
Astra lost 3 percent to Rp 11,500, on growing worries its
second-half earnings this year will be eroded by high interest
rates, which could discourage people from buying motorcycles and
cars on credit.
Bellwether Telkom lost 1.8 percent to Rp 5,550 after Morgan
Stanley cut its view to equal weight from overweight, as the risk
of substitution of fixed-line phones for mobile services is
rising. Telkom's rival Indosat dropped 1.7 percent to Rp 5,750.
Profit taking also hit cement maker Semen Gresik, which lost
2.5 percent to Rp 17,900 after gains in the previous two
sessions.
Heavy equipment companies such as United Tractors and Hexindo
Adiperkasa bucked the trend as foreign investors switched their
investments to these issues after Komatsu Indonesia said it plans
to go private.
United Tractors rose 3.9 percent to Rp 4,625, while Hexindo
jumped 16 percent to Rp 6,550.
Dealers said they expect shares to trade flat to lower on
Friday, led by further selling in Telkom.