Rupiah ends lower on Wednesday

Rupiah ends lower on Wednesday

The Indonesian rupiah closed lower Wednesday as locally based Japanese companies bought dollars to finance imports, dealers said.

The dollar closed at Rp 9,630, up from Rp 9,510 at the close Tuesday.

"We saw many Japanese companies buying dollars Wednesday to finance their imports," said a dealer with a foreign bank in Jakarta.

Dealers said the market was also nervous about a call by Indonesian radical groups for a holy war against the U.S. should it attack Afghanistan.

Dealers expect the dollar to trade between Rp 9,575 and Rp 9,675 Thursday if Bank Indonesia doesn't intervene to support the local currency.

Separately, the weighted average rate on one-month Sertifikat Bank Indonesia notes fell to 17.57 percent at Wednesday's weekly auction from 17.66 percent last week.

The drop in the rate - the first in several months - followed a fall in Indonesia's base money supply, which includes currency in circulation and banks' reserves with Bank Indonesia, to Rp 110.91 trillion as of Sept. 21.

The central bank's target for the base money supply is Rp 110.5 trillion. Dealers said they believed the benchmark interest rate fell because it's now unlikely that the central bank will try to drain more liquidity from the market.