Bloomberg News

Indonesian Rupiah, Bonds Set for Weekly Decline on Europe’s Woes

November 25, 2011

Nov. 25 (Bloomberg) -- Indonesia’s rupiah headed for a fourth weekly decline and bonds dropped on concern Europe’s debt crisis will damp demand for emerging-market assets.

Global funds sold $74 million more Indonesian shares than they bought this week through yesterday, according to exchange data. The rupiah reversed losses in each of the three previous trading sessions on speculation the central bank supported the currency by selling dollars. Bank Indonesia will remain in the market to reduce volatility, Deputy Governor Hartadi Sarwono said on Nov. 23.

“Investors globally are cautious with how things develop in Europe,” said Wiwig Santoso, head of treasury and markets at PT Bank DBS Indonesia in Jakarta. “Indonesia’s bonds, equities and currency can’t escape the impact. The central bank seems comfortable with its market activities.”

The rupiah slipped 0.9 percent this week to 9,106 per dollar as of 9 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. It fell 0.8 percent today and reached 9,230 yesterday, the weakest level since June 2010.

The yield on the government’s benchmark 8.25 percent bonds due July 2021 increased 36 basis points, or 0.36 percentage point, in the first four days of this week to 6.71 percent yesterday, according to the Inter-Dealer Market Association.

Global funds’ ownership of sovereign debt fell 0.9 percent from a week earlier to 219.55 trillion rupiah ($24 billion) as of Nov. 21, according to the finance ministry.

--Editors: Ven Ram, Sandy Hendry

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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