Rupiah ends lower on profit-taking after gains
Rupiah ends lower on profit-taking after gains
Dow Jones Jakarta
The rupiah lost ground on Thursday as foreign banks bought back dollars to lock in profits against the local unit after its recent gains, dealers said.
The dollar closed at Rp 10,065 compared with its close on Wednesday at Rp 10,005.
Dealers said foreign banks bought back the greenback as it seemed to find solid support around Rp 10,000, thanks to dollar demand from local companies.
"For local companies, any level close to Rp 10,000 is a good level to buy the dollar," a dealer said. He also said capital inflows to the local market continued on Thursday, but were unable to offset dollar demand.
Dealers said the volatility in the market diminished as Bank Indonesia bans margin trading of the rupiah against foreign currencies starting on Thursday. The regulation, which was unveiled last week, was part of measures to help the rupiah.
"There were no longer crazy (dollar-rupiah) quotes in the market as margin traders are out of the market," a dealer with a local bank said. He was referring to the spike in the quote that has occurred in the past each time the rupiah is under selling pressure because margin traders desperately need dollars to cover their shorts.
Dealers expect the dollar to trade between Rp 10,000 and Rp 10,150 on Friday.
Elsewhere, shares ended lower for the third straight session on Thursday due to selling in consumer blue chips, amid growing expectations that they will book poor earnings this year due to high fuel prices, dealers said.
The Indonesian government has said it will increase fuel prices early next month in an effort to cut the budget deficit and maintain economic growth.
"Investors continued to consolidate their positions ahead of the announcement of the new fuel prices," said a trader with Paramitra Securities.
The Jakarta Stock Exchange Composite index ended down 0.7 percent, or 7.721 points, at 1050.906.
Decliners led advancers 70 to 39, with 71 stocks unchanged.
Volume fell to 915 million shares valued at Rp 1.1 trillion, compared with 1.25 billion shares valued at Rp 1.2 trillion on Wednesday.
Automotive company Astra International lost 3.3 percent to Rp 10,300 on worries that high fuel prices will discourage people from buying cars.
Likewise, cigarette maker Gudang Garam lost 2.8 percent to Rp 10,600 and food company Indofood dropped 2.6 percent to Rp 760 on expectations that high fuel prices will weaken consumer spending and hurt their earnings this year.
Dealers said sporadic foreign bargain hunting in select mining blue chips limited the fall in the main index.
Nickel miner International Nickel Indonesia (Inco) ended 2.7 percent higher at Rp 15,000, rebounding after falls in the previous three sessions. Oil producer Medco Energi gained 0.7 percent at Rp 3,475 on bargain hunting.
Dealers said they expect the index to fall further on Friday on continuous selling in consumer stocks.