The rupiah nosedived against the US dollar in the Jakarta interbank spot market, dropping below the level of Rp11,350 per US dollar as market players were worried over national economic growth.

The Indonesian currency traded at Rp11,363/11,377 per US dollar, down 53 points from Rp11,310/11,330 at the market`s close a day earlier.

Market players were pessimistic and worried that the Indonesian economic growth would continue to slow down, Edwin Sinaga, a money market analyst, said here on Friday.

The local currency was under pressure because investors preferred to keep the greenback, which they believed safer than the rupiah, he said.

He believed that Bank Indonesia (BI) would try to maintain the rupiah movement at between Rp11,200 and Rp11,300 per US dollar.

If the local currency continued to tumble to Rp11,500 per US dollar, it might approach the level of Rp12,000 per US dollar, he said.

The rupiah was under pressure also because of the report on the bad performance of the Indonesian exports in January 2009, which was only half of that in January 2008, he said.

However, he disagreed comparing the country`s exports in January 2009 with that of January 2008, when the national economic growth was better.

The rupiah tumbled against the US dollar in the Jakarta interbank spot market on Friday morning on indications the global economic crisis was worsening.

The Indonesian currency traded at Rp11,350/11.375 per US dollar, down 40 points from Rp11,310/11,330 at the market`s close a day earlier.

The domestic money market during the week had tended to remain negative towards the local currency as the national economy was being impacted by the slowdown in global economic growth, Edwin Sinaga, a money market observer, said here on Friday.

The sluggish growth of the national economy was reflected in a significant decrease in Indonesia`s exports in January 2009.

"We are worried that the rupiah may weaken further because the market`s sentiment is still negative," he said.

However, he considered the position of the Indonesian currency at Rp11,350 as not yet worrying as it was still well below the level of Rp12,000 per US dollar.

Therefore, Bank Indonesia (BI) was expected only to monitor and supervise foreign banks` foreign currency dealings, he said.

He predicted the central bank would not intervene in the money market (release US dollars) except if the rupiah was approaching the level of Rp12,000 per US dollar.

Publicly listed bank PT Bank CIMB Niaga (JSX:BNGA), the product of a merger in November between PT Bank Niaga and PT Bank Lippo, reported a sharp fall in net profit in the first 11 months of that year.

In separate financial reports, the net profit of Bank Lippo plunged 74 per cent to Rp140.51 billion (US$12.78 million) and meanwhile, the net profit of Bank Niaga fell 13 per cent to Rp593.71 billion. Combined, the net profits of the two banks fell 40 per cent from Rp1.23 trillion to Rp734.22 billion.

Bank CIMB Niaga director Catherine Hadiman said an increase in personnel burden, in the form of merger compensation for employers, was the main factor causing the decline in profit

State-run mining company PT Aneka Tambang (Antam) is intensifying efforts to jack up its gold output by securing more gold mines.

As a slump in global nickel prices has cost the publicly listed mining company dearly, it is seeking to gain control of Martabe gold mine in North Sumatra from its partner Australian-based Oxiana Limited.

Antam president director Alwin Syah Loebis said on Thursday Antam was seeking more than a 50 percent stake in the project, which has a resource base of 6 million ounces of gold and 60 million ounces of silver in a 2,563 square-kilometer area.

Martabe is owned by PT Agincourt Resources, in which Oxiana holds a majority interest.

“Under earlier arrangements, we have secured a 10 percent stake in the project, however we want to increase it,” Alwin said.

Under a memorandum of understanding signed in April last year, Antam had purchased a 10 percent stake in the Martabe project for US$66.5 million, and had an option to acquire a further 10 percent for another US$66.5 million.

The new price, however, is subject to an adjustment based on fluctuations in the gold and silver prices.

“We want to take a majority in the project should the price be attractive and suitable with our budget,” Alwin said, refusing to give figures.

He said Antam had logged the offer to Oxiana, but had no reply yet.

With the acquisition, Antam is expected to be able to reduce its dependency on the nickel business, which accounted for 73 percent of revenue during the first nine months of last year, while the remaining 23 percent was contributed by gold and 4 percent by bauxite and iron ore.

Antam’s revenue slumped by 8 percent to Rp 7.57 trillion ($670 million) in the first nine months of last year as against Rp 8.27 trillion in the same period of 2007 due to the plunge in nickel prices affected by the global economic slowdown.

The company signed on Thursday a memorandum of understanding with the Central Kalimantan administration to develop untapped mineral resources in the province, including high-grade coal, iron ore and bauxite.

Alwin said Antam had budgeted Rp 140 billion this year for exploration, and Rp 3.04 trillion for capital expenditure, up by 301 percent from Rp 758 billion in 2008.

The company expects to produce 12,000 tons of ferronickel this year, down from 17,000 tons in 2008 on declining demand and prices.

Due to difficulties in securing mining concessions, Antam only forecast bauxite and gold output to reach 1 million tons and 2.9 million tons, respectively. The figure is similar to last year’s.

Regional development banks (BPD) are to boost their contributions to stimulating the economy in the regions, to provide alternative liquidity sources amidst the global financial crisis.

“BPDs have so far been acting as a cashier to regional government. With huge regional government funds placed in BPDs, the banks should have moved more actively to support regional development,” Finance Ministry director general of financial balance Mardiasmo said in a seminar Thursday.

He said BPDs should allocate more funds to the real sector, such as infrastructure building and also micro-lending, generating growth, instead of simply placing their funds in the financial sector.

As of December 2008, BPD funds placed in central bank certificates (SBI) reached Rp 24 trillion (US$2.11 billion), and in bonds were Rp 9.3 trillion.

Last year, the ministry transferred Rp 290 trillion, or 33 percent of the state budget, to regional governments, with 94.8 percent of these funds going through BPDs.

This year, the figure has been raised to Rp 320 trillion.

Such a huge amount can be used to spur growth in the regions while many commercial banks are facing a liquidity squeeze.ank Indonesia (BI) deputy governor Siti Ch. Fadjriah said that if BPDs and regional governments could harmonize their objectives then regional economies would grow even faster.

To support BPDs, Mardiasmo said, regional governments, as the banks’ stakeholders, should inject capital and provide financing to the BPDs.

Publicly listed Bank Negara Indonesia (BNI), the nation’s third biggest banks by assets, plans to issue bonds worth between US$200 million and US$300 million in a bid to boost liquidity and lending.

“The exact pricing and timing of issuance of the sub debts will be determined by the condition of the market,” Bien Subiantoro, director of treasury of the bank, said on Thursday.

“We might even issue the bonds this first semester, if the market is good,” he added.

He said the state bank wanted to issue the sub debts overseas, and this was feasible because of the high spread on interest rates.

“For a period of five years, the LIBOR interest rate spread is very high,” he said.

LIBOR is a daily rate based on the interest rates used in the borrowing of unsecured funds from banks in the London wholesale money market.

Plus 600 to 700 basis points added on to LIBOR, would make an interest rate of around 8 to 9 percent, according to Bien.

“We may issue the sub debts (overseas) if the interest rate is below 5 percent,” he added.

In addition to the bond issue, BNI is also looking at the possibility of securing bilateral loans to increase its liquidity.

“We are negotiating with more than five foreign banks to discuss the possibility,” he said, without naming the banks or amount of loans.

With liquidity getting tighter, following the global trend, banks here are forced to be more selec-
tive in making new loans, while existing loans are under increased threat of turning bad. Many firms may have to struggle to pay up on their loans as weakening demand cuts earnings.

The central bank has forecast the banking sector will book around 18 to 20 percent growth in lending this year, far slower growth than the 30 percent booked last year.

BNI president director Gatot M. Suwondo has said that lending this year would likely grow by around 17 percent, down from an estimated 28 percent last year, on the country’s slower economic growth.

Indonesia’s economy may grow this year by between 4.5 and 5.5 percent, compared to an estimated 6.2 percent in 2007.

Gatot said also that lenders are likely to use loans equally both for working capital, and to expand trade financing .

The bank recorded Rp 110 trillion in outstanding credits by the end of last year. Last year, the US fourth largest bank, Wachovia Bank, agreed to provide a US$100 million loan to BNI.