Rupiah ends up on offshore investment inflows
Rupiah ends up on offshore investment inflows
Dow Jones, Jakarta
The rupiah ended slightly up on Friday on inflows of investment
capital from overseas, dealers said.
The dollar closed at Rp 10,223 versus Rp 10,229 on Thursday.
Offshore investors poured dollars into the Indonesian currency
market on Friday ahead of expected initial public offerings on
the Jakarta Stock Exchange and after the sale of the government's
5 percent sale in PT Bank Central Asia (BCA) on Wednesday for
US$215 million, traders said. Foreign investors bought the bulk
of the bank's shares.
"I think basically the market fell off on the dollar, with
players expecting money coming in for some IPOs and government
investment projects," a dealer at a foreign bank said.
"There was also a lot of (dollar) selling from offshore and
money from the BCA sale coming in."
But traders warned the rupiah's strength may be short-lived
due to routine month-end dollar purchases by local corporate to
service offshore debt obligations.
The rupiah may also come under pressure from the potential
impact in the U.S. of Hurricane Rita, which is poised to hammer
the Louisiana and Texas coasts.
"If the dollar strengthens due to less serious hurricane
damage, the rupiah will likely slip (against the greenback) next
week," a dealer said.
Dealers expect the dollar to trade between Rp 10,200 and Rp
10,300 on Monday.
Elsewhere, shares ended lower for the fourth consecutive
session on Friday led by further selling in bank blue chips, amid
expectations of poor 2005 earnings on high interest rates,
dealers said.
Overall sentiment remains weak and cautious, with many
investors staying on the sidelines, worried over a possible fall
in U.S. markets later on Friday in the wake of Hurricane Rita.
On the domestic front, lingering concern over growing public
resistance against fuel prices hikes early next month and the
bird flu outbreak in the capital also added to negative
sentiment.
"These negative factors continue to depress investors," said a
trader with a foreign securities firm. He added that sporadic
bargain hunting by local institutional funds helped the main
index to stay above the important level of 1000.
The Jakarta Stock Exchange Composite index ended down 0.4
percent, or 3.907 points, at 1012.851.
Decliners led gainers 54 to 48, with 74 stocks unchanged.
Volume was one billion shares valued at Rp 1.1 trillion,
compared with 2.1 billion shares valued at Rp 3.7 trillion
Thursday. The higher trade volume on Thursday was due to the
inclusion of a block sale of the government's 5.02 percent stake
in BCA.
Dealers said investors continued to sell bank stocks on
expectations of poor 2005 earnings on high interest rates and
tax.
The high rate could reduce the banks' net interest margins and
will push up credit costs for consumers, analysts said.
Indonesian banks -- which have been exempt from paying taxes
since the 1997-1998 financial crisis -- have to pay 30 percent
tax on their gross profits from the beginning of this year.
Dealers said they expect shares to trade slightly higher on
Monday led by further bargain hunting in telecommunication blue
chips.