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.

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.

The government's first retail sukuk will carry a yield of 12 percent, higher than the average return of comparable government bonds.

Finance Ministry's director general of debt management Rahmat Waluyanto said Wednesday the 12 percent coupon had taken into account "the condition of the domestic financial market, and the cost that could be borne by the government in managing its debts".

"The coupon is also comparable to the yield of three-year government bonds," he said.

Rahmat made such a comparison because the government's first retail sukuk, coded SR-001, will have a three-year maturity.

The retail sukuk is aimed at individual investors, with a minimum purchase of Rp 5 million and its multipliers. There is no purchase limit.

Director of sharia financing Dahlan Siamat said the Finance Ministry did not set any certain target for the issuance of the retail sukuk.

"We do not set any limit (for the retail sukuk issuance), unlike the government's retail bonds," he said.

However, he added, the government could issue retail sukuk only up to Rp 13.6 trillion, based on the amount of the government's available underlying assets.

"It is the maximum amount, although we will not issue that much as we still want to issue global sukuk sometime this year," Dahlan said.

The ministry plans to issue global sukuk later on this year, taking into account market conditions.

Investors are now choosing safer financial instruments after the earlier collapse of the financial market.

"Amid the crisis, we have to carefully issue bonds so that it will not crowd the market out. We need to make the market confident in our bonds," Rahmat said.

He said the Finance Ministry decided to accelerate the issuance of retail sukuk as individual investors were in better position than institutional investors now.

"The crisis creates tight liquidity, which makes demand for bonds drop and yields rise. That is what happens to institutional investors," he said.

The retail sukuk issuance is expected to help plug the 2009 budget deficit, which may reach Rp 132 trillion, up from Rp 51.3 trillion set for the 2009 budget.

Terms and conditions

1.Date offered Jan. 30 - Feb. 20
2.Allotment date Feb. 23
3.Settlement date Feb. 25
4.Maturity date Feb. 25
5.Nominal value per unit Rp 1m
6.Price per unit 100% (at par)
7.Minimum purchased Rp 5m and multiplier
8.Maximum order -
9.Yield/coupon 12 percent per year
10.Payment period Date 25 every month
11.First coupon payment March 25, 2009
12.Investor target: Indonesian individuals

Source: Finance Ministry