Bloomberg News

Rupiah Weakens for Second Day on European Debt-Crisis Concern

December 20, 2011

Dec. 20 (Bloomberg) -- Indonesia’s rupiah dropped the most in three weeks on concern Europe’s debt crisis will worsen, slowing global economic growth and sapping demand for emerging- market assets.

Overseas funds pulled 620 billion rupiah ($68 million) from government debt in the three days through Dec. 16, according to data from the ministry of finance. The rupiah rallied 0.6 percent on Dec. 16 after Fitch Ratings raised Indonesia’s credit rating to BBB-, the company’s lowest investment grade.

“Asian currencies are in a risk-off mood today and the rupiah is leading declines as it still sometimes responds disproportionately to risk,” said Dariusz Kowalczyk, a Hong Kong-based senior strategist at Credit Agricole CIB. “We believe the currency has good medium-term prospects from the rating upgrade once the global environment improves.”

The rupiah slipped 0.2 percent to 9,080 per dollar as of 4:12 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency has weakened 3.2 percent this quarter.

Spain is due to auction three- and six-month securities today. Euro-area governments have to repay more than 1.1 trillion euros ($1.4 trillion) of long- and short-term debt in 2012, according to data compiled by Bloomberg. Italy and Spain have about 146 billion euros of bonds and bills maturing in the first quarter, the data show.

The yield on Indonesia’s 8.25 percent bonds due July 2021 fell three basis points, or 0.03 percentage point, to 6.20 percent, according to prices from the Inter Dealer Market Association.

Moody’s Investors Service and Standard & Poor’s may upgrade Indonesia’s credit rating to investment grade in the first quarter of next year, Coordinating Minister for the Economy Hatta Rajasa said today in Jakarta.

--With assistance from Hidayat Setiaji in Jakarta. Editors: Andrew Janes, Simon Harvey

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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