Rupiah ends tad lower as firms buy dollar

Rupiah ends tad lower as firms buy dollar

Dow Jones, Jakarta

The rupiah ended slightly lower on Tuesday as local companies sought dollars ahead of the month-end, dealers said.

The dollar closed at Rp 8,980, up from its close on Monday at 8,960.

The dollar rose to an intraday high of 9,010 earlier in the day, also because of its gains against other regional units ahead of a testimony by U.S. Federal Reserve chairman Alan Greenspan later on Tuesday.

But the dollar surrendered much of its gains against the rupiah as state-owned banks sold the dollar on the rise, allegedly on behalf of the central bank, dealers said.

Trading volume remained thin as most market participants chose to stay on the sidelines in the run-up to the second round of presidential elections Sept.20, dealers said.

Around 150 million Indonesians will cast their votes again after a first-round election earlier this month failed to produce an outright winner.

Incumbent President Megawati Soekarnoputri is widely expected to face market-favorite Susilo Bambang Yudhoyono in the September poll.

Some officials from the Golongan Karya Party have indicated that the group may support Megawati, boosting her chances of keeping the top job.

Still, many analysts say that Indonesian voters are now more independent-minded than before and that party endorsements matter less than they once did.

Dealers expect the dollar to trade between 8,950 and 9,025 on Wednesday.

Meanwhile, shares ended higher on Tuesday as a late rebound in banking blue chips reversed earlier losses, dealers said.

Overall sentiment remained weak and cautious, weighed down by losses on most Asian markets, they added.

After staying in negative territory for most of the session, the Jakarta Stock Exchange's composite index ended up 2.394 points, or 0.3 percent, at 756.667.

Decliners, however, led gainers 51 to 46, while 86 stocks were unchanged. Volume was 1.37 billion shares valued at Rp 522 billion.

Bank Mandiri, Indonesia's largest lender, ended up Rp 25, or 2.1 percent, to Rp 1,225, Bank Danamon gained Rp 50, or 1.6 percent, to Rp 3,150, and Bank Rakyat added Rp 25, or 1.5 percent, to Rp 1,700.

Also higher on a rebound were shares in cement maker Inducement Tunggal Prakarsa, which ended Rp 75 higher, or 4.4 percent, at Rp 1,800.

Shares in cigarette maker Gudang Garam ended down Rp 100, or 0.7 percent, at Rp 14,050 and car maker Astra International dropped Rp 50, or 0.9 percent, to Rp 5,600 on profit-taking.

"The market tried to recover from its earlier sluggish performance," said a trader with a local securities firm, expecting that the rebound will continue on Wednesday.