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.