Bloomberg News

Rupiah Drops After Global Funds Cut Indonesian Share Holdings

October 04, 2011

Oct. 4 (Bloomberg) -- Indonesia’s rupiah declined for a second day after global funds reduced holdings of the nation’s assets on concern Europe’s sovereign-debt crisis will sap demand for higher-yielding emerging-market assets.

International investors sold $60 million more local shares than they bought yesterday, according to exchange data. The currency pared losses in the last 90 minutes of trading after having dropped as much as 0.8 percent earlier. Policy makers will remain in the market to stabilize the rupiah, Bank Indonesia’s Director of Monetary Policy, Hendar, who goes by only one name, said in a mobile-phone text message yesterday.

The rupiah dropped 0.1 percent to 8,906 per dollar as of 4:14 p.m. in Jakarta, according to prices from local banks complied by Bloomberg. The currency slumped 2.9 percent last month, the most since February 2009. The MSCI Asia-Pacific Index of shares fell after European finance ministers pushed back a decision on releasing an 8 billion-euro ($10.5 billion) loan installment to Greece until after Oct. 13.

“The possible default in Greece and the dimmer global economic outlook are now the major concerns in the market,” said Mika Martumpal, a currency analyst at PT Bank Commonwealth in Jakarta. “Global investors are taking profits in emerging markets and holding more dollar assets.”

Indonesia’s benchmark 10-year bonds snapped a six-day rally. The yield on the 8.25 percent notes maturing in July 2021 rose 11 basis points, or 0.11 percentage point, to 6.98 percent, according to Inter Dealer Market Association.

--With assistance from Yumi Teso in Bangkok. Editors: Ven Ram, Sandy Hendry

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

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


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