Bloomberg News

Rupiah Completes Biggest Monthly Slide in Two Years; Bonds Drop

September 30, 2011

Sept. 30 (Bloomberg) -- Indonesia’s rupiah completed its biggest monthly drop since 2009 after global funds reduced holdings of the nation’s assets on concern the global economic recovery is stalling. Bonds dropped.

The currency fell for a second month as exchange data showed foreign funds sold $667 million more Indonesian shares than they bought in September through yesterday. The International Monetary Fund this month cut its 2011 growth estimate for the global economy to 4 percent from 4.3 percent. The rupiah rose for a fourth day today after Governor Darmin Nasution said last week that Bank Indonesia would buy bonds and intervene in the currency market “until the market cools.”

“The markets have reacted to Europe’s debt crisis,” said Wiwig Santoso, head of treasury and markets at PT Bank DBS Indonesia in Jakarta. “The central bank and the authorities are prudent to the developments in the rupiah and investors are comfortable with the presence of the central bank in the market.”

The rupiah dropped 3 percent this month, the most since February 2009, to 8,799 per dollar as of 4 p.m. in Jakarta, according to prices from local banks complied by Bloomberg. It fell 2.7 percent this quarter, the biggest decline since the three months ended March 2009. The currency was little changed from the end of last week.

Overseas holdings of sovereign bonds dropped 11.7 percent this month to 218.53 trillion rupiah ($24.8 billion) as of Sept. 29, according to the debt-management office.

The yield on Indonesian government’s benchmark 8.25 percent bonds due July 2021 rose 10 basis points, or 0.10 percentage point, this month to 6.95 percent, according to prices from the Inter-Dealer Market Association. The rate fell 61 basis points this quarter.

--Editors: Greg Ahlstrand

To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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