Indonesian share prices closed sharply lower on Monday, falling 3.31 percent in line with regional markets amid worries over the outlook for the US economy, with sentiment also undermined by the rupiah's weakness, dealers said. The Jakarta Stock Exchange composite index lost 36.329 points at 1,060.189 on volume of 1.69 billion shares worth 2.27 trillion rupiah (238 million dollars). The rupiah was at 9,570-9,575 to the dollar, down from Friday's 9,540-9,545.
Foreign exchange dealers attributed the Indonesian unit's weakness to strong dollar demand from local corporates, while supply remains tight despite the central bank's intervention.
Bank Indonesia deputy governor Aslim Tajuddin said that the rupiah's weakness over the past month can also be attributed to short-term fund outflows from emerging markets to safer instruments such as US treasuries.
He said it is possible that once perceptions about emerging markets improve, the rupiah can bounce back to its "fundamentally" fair level of about 9,000 per dollar.
An analyst with a foreign brokerage said the rupiah's fall damaged sentiment which was already hit by the sharp falls in the region Monday.
"The index hit its support level of 1,056 points before rebounding slightly at the close. I guess it is fair enough given some major markets also dropped by around three percent," the analyst said.
He added that today's fall should provide an opportunity for some "bottom-fishing" as the index touched its support level.
Index heavyweight Telkom led the market's falls, closing down 125 rupiah at 4,500 while its rival Indosat was down 75 at 4,825.
Inducement was down 200 at 2,875 and Semen Gresik fell 100 at 16,900.
Cigarette firm Sampoerna was down 50 at 10,350, while its rival Gudang Garam was down 200 at 15,250 and vehicle supplier Astra International lost 400 at 10,600.
Bank Mandiri was down 70 at 1,620 amid lingering worries over an ongoing probe into the bank's loans, while Bank Rakyat Indonesia was down 150 at 2,675 and Bank Central Asia lost 75 at 3,325.
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