Rupiah ends up after BI intervention

Rupiah ends up after BI intervention

Dow Jones, Jakarta

The rupiah ended slightly higher on Wednesday on profit-taking in the dollar following the recent rise in the U.S. unit and Bank Indonesia's suspected intervention, dealers said.

The dollar closed at Rp 9,510, as against Tuesday's close of Rp 9,525.

Bank Indonesia was suspected of unloading dollars again Wednesday via state banks.

Bank Indonesia Governor Burhanuddin Abdullah confirmed Wednesday that the central bank had been in the market during the past few days to slow the dollar's rise. The rupiah ended at an eight-month low on Tuesday.

Burhanuddin also signaled the central bank's readiness to hike interest rates more aggressively amid the rising threat of inflation and ample rupiah liquidity in the money market.

Goldman Sachs said in its latest research note that Bank Indonesia needs to hike the interest rate on the one-month Sertifikat Bank Indonesia, or SBI, notes by 100 basis points this year to send a clearer signal on monetary policy and the rupiah. The 1-month SBI rate is currently at 7.44%.

Dealers said offshore market participants locked in profit on the dollar's recent gains, sending the U.S. unit lower against the rupiah.

"Market players started to go short dollars against most Asian currencies today, which also spilled over to the dollar-rupiah," a dealer with a foreign bank said.

Dealers expect the dollar could fall below Rp 9,500 on Thursday, but that will depend on the dollar's movement against its major rivals later on Wednesday.

The greenback could be anywhere between Rp 9,470 and Rp 9,525 on Thursday, they said.

Meanwhile, Indonesian shares ended lower for the fifth consecutive session led by selling in Indonesian Satellite Corp. (Indosat) after it reported 2004 net profit fell 74 percent, dealers said.

They added that many investors also continued to thin their equity portfolio amid lingering worries that the central bank may raise interest rates to combat rising inflation and defend the rupiah.

Continued losses in most Asian markets also added to negative sentiment, but sporadic bargain-hunting in select bank blue chips prevented the main index from falling deeper, said a dealer with Paramitra Securities.

"I hope that the market will rebound on Thursday as selling pressure reduces," he added.

The Jakarta Stock Exchange Composite Index ended down 5.173 points, or 0.5 percent, at 1065.13, off an earlier low of 1057.95.

Decliners led gainers 85 to 60, with 67 stocks unchanged.

Volume was 2.86 billion shares valued at Rp 2.7 trillion, compared with 4.2 billion shares valued at Rp 3.3 trillion on Tuesday.

Indosat, the nation's second-largest telecommunication company, fell 3.1 percent to Rp 4,750 after the company said its 2004 net profit fell to Rp 1.6 trillion from Rp 6.1 trillion a year earlier due to an absence of extraordinary gains last year.

Indosat's rival Telekomunikasi Indonesia dropped 1.1 percent to Rp 4,450 on expectations that it will delay announcing its 2004 earnings due to auditing problems.

It will miss the reporting deadline on Thursday set by the Jakarta bourse.

Also lower were shares in food company Indofood Sukses Makmur, which fell 1.8 percent to Rp 1,110 on profit-taking.