Bloomberg News

Rupiah Touches 17-Month Low as Europe Debt Crisis Spurs Outflows

November 25, 2011

Nov. 24 (Bloomberg) -- Indonesia’s rupiah touched a 17- month low after foreign funds reduced holdings of the nation’s assets on speculation Europe’s debt crisis is worsening.

Overseas investors sold $51 million more Indonesian shares than they bought in the first three days of this week, according to exchange data. The currency rebounded yesterday after dropping as much as 1.5 percent as Bank Indonesia Deputy Governor Hartadi Sarwono said the central bank will remain in the market to reduce volatility in the rupiah. Germany failed to receive sufficient bids at a debt sale yesterday.

“The rupiah is reacting to the broad trend in global markets,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. “The risk aversion has reached another level after the German bond sale yesterday.”

The rupiah slipped 0.7 percent to 9,099 per dollar as of 9:22 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. It fell by as much 1.8 percent to 9,200 earlier, the weakest level since June 2010.

Foreign ownership of Indonesian government debt dropped to 219.55 trillion rupiah ($23.9 billion) as of Nov. 21, from 221.47 trillion rupiah 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 yesterday, according to prices from the Inter-Dealer Market Association.

--Editors: Andrew Janes, Simon Harvey

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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