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Nov. 17 (Bloomberg) -- Indonesia’s rupiah fell to a seven- week low after foreign funds cut holdings of the nation’s stocks as Europe’s worsening debt crisis deterred risk-taking.
The MSCI Asia-Pacific Index of regional shares dropped for a third day after Fitch Ratings said Europe’s debt crisis poses a “serious risk” to U.S. banks. Overseas investors sold $69 million more local shares than they bought yesterday, according to exchange data. Bank Indonesia lowered its 2012 economic growth forecast this week to 6.5 percent from a previous estimate of 6.7 percent.
“Because of Europe’s debt crisis there is a general trend that people are selling riskier assets,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. “Indonesian economic fundamentals are strong, so the focus has been on external factors.”
The rupiah dropped 0.7 percent to 9,060 per dollar as of 9:08 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency reached 9,068 earlier, the weakest level since Sept. 26.
The central bank unexpectedly reduced its benchmark interest rate by 50 basis points to 6 percent last week to boost economic growth. The government sold $1 billion of Islamic bonds due 2018 this week at a yield of 4 percent, less than half the rate at which it sold its debut dollar sukuk in 2009.
--Editors: Andrew Janes, Sandy Hendry
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