Rupiah ends up on suspected intervention

Rupiah ends up on suspected intervention

Dow Jones, Jakarta

The rupiah recouped early losses to end slightly higher Friday on suspected Bank Indonesia intervention.

Dealers estimated that the central bank sold around $10 million Friday to help the local unit, which was depressed by dollar demand from local companies.

The dollar ended at Rp 10,500, down from its close Thursday at Rp 10,560. The dollar had risen to an intraday high of Rp 10,590 shortly after interbank trading opened and before Bank Indonesia was suspected to have flexed its muscles in the market.

"Unlike Thursday, Bank Indonesia's intervention today was successful thanks to the thin trading volume," said a dealer with a foreign bank.

Bank Indonesia doesn't comment on suspected intervention, although officials have frequently stated that it will defend the currency if needed.

Dealers said dollar demand will continue ahead of the end of the year as local companies have to pay maturing offshore debts and multinational companies here send profits back to their home countries.

Bank Indonesia is expected to remain the largest dollar supplier in the market due to the absence of foreign capital inflows, dealers added.

Meanwhile, most Asian currencies were higher late Friday, as the South Korean won's inexorable rise to a new eight-month closing high overpowered the pressure on the region from the yen's slump past 124 yen to the dollar, dealers said.

Strong foreign equity fund inflows hoisted the won to as high as 1,270.9 won against the dollar - just shy of the 1,270 won level that won bulls have been targeting, dealers said.

News that South Korea's economy expanded 1.8 percent year-on- year in the third quarter helped pushed the dollar below the psychologically important 1,280 won level Thursday.

The dollar ended at 1,271.8 won, its lowest close since March 9, when it finished at 1,268.8 won. This compares with Thursday's close of 1,276.8 won.

The won's strength helped improve sentiment toward other currencies in the region, prompting participants to liquidate their long U.S. dollar positions against currencies like the Singapore dollar, the Thai baht and the New Taiwan dollar, dealers said.