Indonesia’s bonds declined as the risk Greece will leave the euro sapped demand for higher-yielding emerging-market assets. The rupiah rebounded from a two-year low on suspected central bank intervention.
The Jakarta Composite Index fell the most in six weeks as overseas investors pulled money from local stocks for a seventh day. Greek political leaders, divided over austerity measures required for a European Union-led bailout, failed to form a coalition government after a May 6 election. Bank Indonesia doesn’t want the rupiah to weaken too fast and will continue to intervene in the currency market, deputy governor Hartadi Sarwono said in Jakarta today.
“It’s still Greece,” said Apressyanti Senthaury, an analyst in the treasury division at PT Bank Negara Indonesia. “Bank Indonesia will guard the rupiah.”
The yield on the 7 percent bonds due May 2022 climbed 15 basis points to 6.54 percent, the highest since December, according to closing prices from the Inter Dealer Market Association. The yield climbed 29 basis points, or 0.29 percentage point, this week. Local financial markets are closed for public holidays tomorrow and the day after.
Foreign investors pulled 3.83 trillion rupiah ($410 million) from Indonesian government debt last week, according to finance ministry data. The ministry raised 775 billion rupiah from a bond auction this week, well short of its 6 trillion rupiah target, the debt management office said.
The rupiah strengthened 0.6 percent 9,242 per dollar as of 4:41 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency touched 9,396 earlier, the weakest level since February 2010.
One-month implied volatility, which measures exchange-rate swings used to price options, rose 2 percentage points to 10 percent, the highest level since March 7. The measure gained 2.5 percentage points this week.
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