Rupiah Drops a Third Day After Foreigners Cut Debt Holdings
February 23, 2012, 5:48 AM ESTBy Yudith Ho and Lilian Karunungan
Feb. 23 (Bloomberg) -- Indonesia’s rupiah fell for a third day on speculation yields on the nation’s debt are no longer as attractive to overseas investors after the central bank unexpectedly cut its benchmark interest. Bonds fell.
Global funds reduced holdings of Indonesia’s government securities by 4 trillion rupiah ($441 million) this month through yesterday, data compiled by Bloomberg show. Bank Indonesia lowered its reference rate by 25 basis points to 5.75 percent on Feb. 9, taking advantage of easing inflation to support growth. Indonesia’s 10-year benchmark government bonds are yielding 5.33 percent, compared with 5.56 percent for Italy and 5.54 percent for Poland.
“The rupiah is likely to trend down for the day,” said Taufan Tito, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta. “Investors are finding the high returns in Europe more attractive. It’s still the effect of the central bank’s rate cut earlier this month.”
The rupiah dropped to 9,069 per dollar as of 5:20 p.m. in Jakarta, compared with 9,065 yesterday, according to prices from local banks compiled by Bloomberg. Inflation eased to a 22-month low of 3.65 percent in January, from 3.79 percent in December, official data show.
The yield on the government’s 7 percent bonds due May 2022 increased six basis points, or 0.06 percentage point, to 5.33 percent, according to prices from the Inter Dealer Market Association.
--Editors: Andrew Janes, Ven Ram
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To contact the reporters on this story: Yudith Ho in Singapore at yho35@bloomberg.net; Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
