Bloomberg News

Rupiah Declines as Importers Buy Dollars, Investors Sell Stocks

January 29, 2012

Jan. 27 (Bloomberg) -- Indonesia’s rupiah dropped on speculation importers increased demand for the dollar to take advantage of a more favorable exchange rate after the local currency reached the highest level in almost three months.

Overseas investors sold $55 million more Indonesian shares than they bought in the first four days of this week, paring the month’s net purchases to $381 million, exchange data show. The government will report consumer prices on Feb. 1 after inflation cooled for a fourth month in December. The rupiah rallied 1.5 percent in the five days to Jan. 20, the best weekly performance in two years.

“The move in the currency was quite big last week and that may have prompted importers to buy dollars,” said Gundy Cahyadi, an economist at Singapore-based Oversea-Chinese Banking Corp. “Investors are consolidating their positions.”

The rupiah dropped 0.2 percent to 8,979 per dollar as of 9:58 a.m. in Jakarta and was down 0.4 percent for the week, according to prices from local banks compiled by Bloomberg. It touched 8,875 on Jan. 25, the strongest level since Nov. 1.

Consumer prices rose 3.8 percent in December from a year earlier, the least since March 2010, official data show. The government is also due to issue export numbers the same day as the inflation report.

The yield on the government’s 7 percent bonds due May 2022 was little changed at 5.6 percent yesterday, compared with a week ago, according to prices from the Inter-Dealer Market Association. The rate fell 57 basis points in the five days ended Jan. 20.

--Editors: Simon Harvey, 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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