Indonesia has arranged to provide Pertamina with dollars through state-run banks, enabling the state-oil firm to boost fuel imports without hurting the rupiah, a Pertamina official said yesterday.
Worries that Pertamina's fuel imports would pick up again after a cutback in June because of a cash shortage prompted several analysts to downgrade the rupiah's outlook.
Pertamina received 9.3 trillion rupiah (Dh3.53 billion) from the government this weekend to reimburse it for selling fuel at subsidised prices, a timely injection as the company increased July fuel imports by 42 per cent from June.
But Pertamina said it would not have to go to the currency market to buy dollars.
"The dollar buying is already arranged by the government," Pertamina spokesman Abadi Poernomo told Reuters. "It should be no problem for Pertamina."
The rupiah was steady at 9,658 per dollar in late Asian trading yesterday, above an eight-week low of 9,662 hit last week, even after Pertamina's July fuel import plans became known to traders and investors.
The government's dollar-supply plan together with central bank measures aimed at curbing offshore speculation helped prop up the rupiah, among Asia's worst-performing currencies this year, dealers said.
"Pertamina can buy dollars directly from Bank Indonesia," said Danu Firdiansyah, a currency dealer at EXCO Nusantara Indonesia in Jakarta.
"So it won't affect the forex markets. BI wanted it to be this way."
The central bank declined to comment about the dollar supply plan.
The central bank had been defending the rupiah since the currency plummeted to a three-year low of 9,800 per dollar on April 26.
Bank Indonesia has raised interest rates and soaked up excess funds from the financial system in the past couple of months.
Two weeks ago, the central bank announced plans to tighten foreign exchange trading, including limiting certain derivative transactions and banning the purchase of rupiah-denominated securities issued by non-residents.
Meanwhile, Indonesia is close to ending a four-year dispute over a revenue sharing agreement with ExxonMobil Corp aimed at jumpstarting the Cepu oil project that is likely to help the country's external balances in the coming years.
But JPMorgan Chase said in a report that the rupiah remained pressured by surging oil prices, a weak balance of payments outlook and narrowing gap between Indonesian and U.S. interest rates.
"We continue to see dollar-rupiah risks as tilted towards further upside," JPMorgan said.
Indonesia is a member of the Organisation of the Petroleum Exporting Countries but has struggled to maintain its status as a net crude exporter.