Rupiah weakends despite central bank intervention
Rupiah weakends despite central bank intervention
Dow Jones, Jakarta
The Indonesian rupiah ended lower on Thursday as the market tracked a strong dollar, but central bank intervention helped cushion the local currency's slide, dealers said.
The dollar closed at Rp 9,805, up from Rp 9,781 on Wednesday. The dollar peaked at Rp 9,823 in intraday trading.
"We expected the rupiah to go much (lower), but it didn't because Bank Indonesia sold dollars though state banks at the Rp 9,820 mark," a dealer at a foreign bank said.
The release late Wednesday of data showing that the U.S. trade deficit narrowed in May prompted a surge in the U.S. unit against the Japanese yen that local investors tracked with dollar purchases, dealers said.
They expect the dollar to range from Rp 9,800 to Rp 9,820 on Friday, with the rupiah likely to gain traction against the greenback from central bank intervention.
Elsewhere, Indonesian shares ended higher on Thursday, led by sharp gains in Bank Lippo on expectations that consortium Swissasia will sell its stake in the bank at a premium, dealers said.
Gains across Asian markets helped spur buying on the local bourse, but renewed worries that the central bank may continue to increase its key interest rate to defend the falling rupiah kept overall sentiment weak, dealers said.
Bank Indonesia on Wednesday increased its key rate on one- month Bank Indonesia notes to 8.49 percent from 8.44 percent previously.
"The interest rate and the rupiah factors discouraged investors from taking up strong buying positions," said an analyst with Kuo Capital Securities.
The Jakarta Stock Exchange's Composite Index added 3.775 points, or 0.3 percent, to 1136.569.
Gainers led decliners 71 to 50, with 70 stocks unchanged. Volume was 1.9 billion shares valued at Rp 1.5 trillion, compared with 1.5 billion shares valued at Rp 1.2 trillion on Wednesday.
Bank Lippo jumped 8.2 percent to Rp 1,580 on hopes that Swissasia will sell its 52 percent stake in the bank above the current market price. Malaysia's Khazanah Nasional Bhd. is reported as the leading bidder for the Bank Lippo stake.
Among other key stocks, Telekomunikasi Indonesia (Telkom) rose 1 percent to Rp 5,150 ahead of its plan to pay a dividend of Rp 152 a share to shareholders registered as of Friday.
Bank Negara Indonesia rose 1.8 percent to Rp 1,670 on expectations that the government will proceed to sell up to a 30 percent stake in the bank later this year.
On the downside, automotive company Astra International continued to succumb to selling pressure, losing 1.2 percent to Rp 12,500 on renewed worries over declining car sales due to high interest rates.
Dealers said they expect Indonesian shares to trade slightly lower Friday on profit-taking after gains in the previous four sessions.