Rupiah weakens slightly on imports demand

Rupiah weakens slightly on imports demand

Dow Jones, Jakarta

The rupiah slipped slightly against the greenback on Thursday in
a day of slow trading punctuated by state oil and gas company
Pertamina's dollar purchases, traders said.

The dollar closed at Rp 9,655, from its close on Wednesday at
Rp 9,648.

"The trading is very slow now because there is not much demand
flow from the customers...but the oil company still wants to buy
dollars," a dealer at a foreign bank said.

Indonesian corporates traditionally pay their foreign currency
denominated debts at end-month, prompting intense dollar
purchases.

Pertamina is scrambling to comply with a government directive
to increase its fuel reserves to cover consumption for 20 days
from a current level of 12 days.

Traders linked the easing in the trading volume on Thursday to
growing investor acceptance of new foreign exchange regulations
announced last week.

Bank Indonesia will implement next month regulations that will
restrict the amount of dollars banks can borrow from offshore
counterparts without underlying transactions at $1 million.
Previously, there was no cap on the amount.

Central bank officials have said that the move is aimed at
reducing the amount of speculative offshore money coming into
Indonesia, which can destabilize the exchange rate.

The announcement of the new rules prompted investor volatility
that drove down the rupiah against the dollar earlier late last
week and earlier this week.

"Today I think people are reconsidering and consolidating
about what to do next," a trader said.

"I'm not saying everything has settled down completely...but I
don't see an immediate need for investors to convert their rupiah
proceeds into dollars."

Dealers expect the dollar to trade between Rp 9,630 and Rp
9,655 on Friday.

Meanwhile, Jakarta shares ended slightly higher as bargain
hunters bought back a mixture of blue chips and second liners,
following recent corrections, dealers said.

The Jakarta Stock Exchange's Composite Index closed up 0.2
percent, or 2.73 points, at 1,137.42. The index touched an
intraday high of 1,146,59 before profit taking trimmed the gains.

Gainers led decliners 58 to 53 with 84 stocks unchanged.
Volume traded was 958.5 million shares, worth Rp 1.2 trillion
compared with 1.5 billion shares valued at Rp 1.4 trillion on
Wednesday.

"Buying interest was not really strong today as most blue
chips still look overbought," a dealer with a local securities
firm said.

"We recommended that our clients take profit on rally."

Leading the market's rise was the nation's largest cigarette
maker Gudang Garam, which rose 3.6 percent to Rp 12,950 after a
recent slide sparked by concerns the government's plan to raise
minimum cigarette retail prices would hurt Gudang Garam's
cigarette sales.

State-run Bank Negara Indonesia (BNI) gained 3.9 percent to
end at Rp 1,880. Its smaller sister Bank Rakyat Indonesia (BRI)
edged up 0.9 percent to finish at Rp 2,875.

Gold and nickel miner Aneka Tambang rose 2.1 percent to Rp
2,450, with rupiah weakness expected to boost the company's
exports revenues.

Telecommunications company Indosat was up 0.9 percent at Rp
5,600, but its rival Telkom dropped 1 percent to Rp 4,950 on
continued profit taking.

Bank Mandiri was also hurt by profit taking, down 0.7 percent
at Rp 1,510.

Dealers said they expect shares trade flat to lower on Friday
as the market seeks fresh impetus. The local bourse is expected
to look to Wall Street for direction.