Rupiah ends up on optimism of growth

Rupiah ends up on optimism of growth

Dow Jones Jakarta

The rupiah ended higher on Tuesday, on buying fueled by optimism that a powerful blast in Jakarta last week likely will not hurt the country's overall economy or disrupt next week's presidential election, dealers said.

The dollar ended at Rp 9,110, down from its close of 9,280 on Friday. Tuesday's closing level was the U.S. unit's lowest since July 27, when it ended at 9,095. The local currency market was closed on Monday for a public holiday.

Dealers said the rupiah's recovery after the blast last week showed that investors have become immune to terrorist attacks in Indonesia following the Bali bombing in 2002.

"The long weekend was also peaceful, which gave further reasons for market participants to unload the dollar," a dealer said.

Coordinating Minister for Economic Affairs Dorodjatun Kuntjoro-Jakti added to the optimism on Tuesday, saying he expects the economy to grow 4.8 percent this year, in line with the government's target, despite the bombing outside the Australian embassy in Jakarta last Thursday.

"Our economic fundamentals are better now than in the previous years," he told reporters.

Dealers said they expect the presidential runoff election on Monday to be peaceful as they do not see any connection between the bombing and the poll. Surveys show that former security minister Susilo Bambang Yudhoyono is expected to beat President Megawati Soekarnoputri.

Also helping the rupiah was the 1.4 percent rally in Indonesian stocks on Tuesday, as foreign investors continued to buy back Indonesian shares after heavy selling following the recent bombing.

Dealers said the dollar may continue falling on Wednesday, but the decline is expected to slow after Tuesday's sharp fall.

They expect the dollar to trade between 9,050 and 9,150 on Wednesday.

Meanwhile, shares ended higher as investors remained hopeful that the aftereffects of the bomb attack would not undermine the economy and disrupt the Sept. 20 presidential elections, dealers said.

"Also, a peaceful election is expected to further boost the rupiah and consequently prop up sentiment," said a trader with Catur Pilar Securities.

The Jakarta Stock Exchange's main index ended up 11.241 points, or 1.4 percent, to 809.016 - a fresh 20-week high.

Gainers led decliners 63 to 58, with 76 stocks unchanged. Volume was 1.87 billion shares valued at Rp 1.7 trillion.

Telekomunikasi Indonesia led gainers, ending up Rp 150, or 1.9 percent, at Rp 8,200, on expectations that the company will make an announcement later this week on its planned 2-for-1 stock split.

Indonesian Satellite Corp. jumped Rp 150, or 3.5 percent, to Rp 4,425 on expectations of higher 2004 revenue.

Bank Danamon climbed Rp 200, or 5.6 percent, to Rp 3,800 and Bank Central Asia gained Rp 100, or 5.3 percent, to Rp 1,975.

Bucking the trend, Bank Rakyat fell Rp 25, or 1.3 percent, to Rp 1,925 on profit-taking.

Dealers said they expect the market on Wednesday to trade higher, with profit-taking likely to cap gains.