Bloomberg News

Rupiah Heads for Biggest Monthly Loss Since 2009 on Europe Debt

November 30, 2011

Nov. 30 (Bloomberg) -- Indonesia’s rupiah is poised for its biggest monthly decline since February 2009 on concern Europe’s worsening debt crisis will slow global economic growth. Government bonds dropped the most since January.

The currency reached a 17-month low yesterday. Bank Indonesia is committed to stabilizing the rupiah by selling foreign currencies and buying government bonds in the secondary market, Perry Warjiyo, director for economic research and monetary policy at the central bank, said yesterday. The monetary authority unexpectedly reduced its benchmark interest rate by 50 basis points to 6 percent on Nov. 10 to boost growth.

“On the euro-zone worries, the markets have been looking for positive signals,” said Radhika Rao, an economist at Forecast Pte in Singapore. “The rate cut was premature, so that is playing on the minds of investors. There are constraints to how much the central bank can intervene in the market.”

The rupiah slid 3.5 percent this month to 9,170 per dollar as of 9:05 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. It fell 0.2 percent today and reached 9,240 yesterday, the weakest level since June 2010.

Italy had to pay more than 7 percent for its debt this week, while Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. had their long-term credit grades reduced to A- from A by Standard & Poor’s yesterday.

The yield on the government’s benchmark 8.25 percent notes due July 2021 increased 51 basis points, or 0.51 percentage point, this month to 6.85 percent yesterday, according to the Inter-Dealer Market Association.

--Editors: Andrew Janes, Ven Ram

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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