Bloomberg News

Rupiah Reaches 17-Month Low, Bonds Fall on Europe’s Debt Woes

November 23, 2011

Nov. 23 (Bloomberg) -- Indonesia’s rupiah traded at the weakest level in 17 months and bonds fell on concern Europe’s lingering debt crisis will damp demand for higher-yielding emerging-market assets.

The MSCI Asia Pacific Index of regional stocks slid as Spain’s three-month borrowing costs more than doubled at an auction yesterday.

The currency rebounded from earlier losses of as much as 1.5 percent on speculation the central bank intervened. Bank Indonesia stepped into the market to curb further declines, according to PT Bank Commonwealth in Jakarta.

“Investors are worried that Europe’s debt crisis will worsen because of the region’s rising borrowing costs,” said Mika Martumpal, a currency analyst at PT Bank Commonwealth. “It is all about sentiment.”

The rupiah rose 0.1 percent, appreciating for a second day, to 9,040 per dollar as of 4:10 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. It earlier reached 9,180, which was the weakest level since June 2010.

Bank Indonesia will remain in the market to reduce volatility in the rupiah, Deputy Governor Hartadi Sarwono said by mobile-phone text message today in Jakarta.

“Further weakening of the currency is not affordable,” Jakarta-based Martumpal said.

Foreign ownership of Indonesian government debt was 219.55 trillion rupiah ($24.3 billion) as of Nov. 21, almost 1 percent lower than a week earlier, according to finance ministry data.

The yield on the government’s benchmark 8.25 percent bonds due July 2021 increased 12 basis points, or 0.12 percentage point, to 6.53 percent today, according to the Inter-Dealer Market Association. The rate has climbed for a seventh consecutive day and reached more than one-month high.

--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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