Rupiah ends steady; BI measures help

Rupiah ends steady; BI measures help

Dow Jones/Jakarta

The Indonesian rupiah ended steady on Wednesday as Bank
Indonesia's further measures to help the local unit seemed to
bring some results, dealers said.

The dollar closed unchanged at Rp 10,360.

Dollar buying from margin trading speculators to cover short
positions in the greenback prevented the local unit from
appreciating, traders said. These speculators squared short
dollar positions built above Rp 11,000 last week as Bank
Indonesia later this month will ban dollar-rupiah margin trading.

The policy is part of the rupiah-support measures that the
central bank announced Tuesday, which include raising its
benchmark BI rate by 50 basis points to 10 percent.

"Trading was quiet and smooth, showing that the central bank's
policies worked for the time being," a dealer with a local bank
said. "Easing global oil prices were also positive for the
rupiah."

Still, the market is waiting for further steps by the
government, including cutting fuel subsidies to keep the state
budget sustainable and improving the investment climate to bring
in capital inflows, dealers said.

President Susilo Bambang Yudhoyono said last week that the
government plans to cut fuel subsidies after October. But, Bisnis
Indonesia daily Wednesday quoted a local senator as saying that
the government might bring forward the cutting of fuel subsidies
to October.

Dealers expect the market to remain calm on Thursday, with the
dollar trading between Rp 10,200 and Rp 10,390.

Indonesian shares ended marginally higher on Wednesday, led by
gains in cement blue chips on expectations of improved 2005
earnings due to rising domestic demand, dealers said.

Overall sentiment was cautious amid concerns over the rupiah,
which hasn't strengthened despite a central bank move to raise a
key interest rate to defend the currency, they added. At 0900
GMT, the U.S. dollar was trading unchanged at Rp 10,360.

The central bank Tuesday increased the benchmark Bank
Indonesia Rate by 50 basis points to 10 percent in an effort to
prevent steeper declines in the rupiah, which has dropped sharply
against the U.S. dollar due to the impact of the high oil prices
and the government's payment of oil subsidies.

"The main index came off its intraday high as investors
swiftly took profit amid concerns over the movement of the
rupiah," said a trader with a local securities firm.

The Jakarta Stock Exchange Composite index ended up 0.7
percent, or 7.786 points, to 1059.380, off its intraday high of
1063.638.

Gainers led decliners 73 to 34, with 66 stocks unchanged.

Volume rose to 958 million shares valued at Rp 1.2 trillion,
compared with 850 million shares valued at Rp 853 billion on
Tuesday.

Semen Gresik, the nation's largest cement maker, jumped 5.7
percent to Rp 16,600 on a rebound and expectations of solid 2005
earnings. "The company has the lowest financing cost and foreign
exchange fluctuation risk" among cement makers, Kim Eng
Securities said in a research note. The note added that Gresik's
debts are mostly in rupiah.

Gresik's rival Indocement gained 3.4 percent to Rp 3,050 and
Semen Cibinong advanced 4.7 percent to Rp 450, on bargain-hunting
after recent falls.

Dealers said investors continued to buy crude palm-oil shares
on expectations of improved 2005 earnings due to rising commodity
prices.

Palm oil producer Astra Agro Lestari rose 2.9 percent to
Rp 4,400 and rival London Sumatra gained 1.2 percent to Rp 2,175.

Profit-taking hit bellwether Telekomunikasi Indonesia, which
fell 1 percent to Rp 5,200 and nickel miner International Nickel
Indonesia, or Inco, which ended down 1 percent at Rp 15,500. Inco
shares rose early this week due to expectations of solid 2005
earnings as its revenue is denominated in U.S. dollars.

Dealers said they expect shares to continue to trade higher
Thursday on further buying in cement and plantation blue chips.