Bloomberg News

Rupiah Drops Most in Two Weeks, Bonds Decline on Growth Concern

July 09, 2012

Indonesia’s rupiah fell the most in two weeks and government bonds declined on concern Europe’s debt crisis slowed the nation’s growth last quarter.

Southeast Asia’s largest economy may have expanded 6.3 percent or less in the three months through June, President Susilo Bambang Yudhoyono said in Jakarta yesterday. That compares with the central bank’s June 12 forecast of 6.3 percent to 6.7 percent this year. Bank Indonesia will keep its reference rate at 5.75 percent when it meets on July 12, according to all 20 analysts surveyed by Bloomberg.

“Growth is a concern, but any stimulus will probably come from the fiscal side instead of the monetary side,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. “In the next one to two months, the rupiah may continue to be under pressure due to the trade deficit and persistent dollar demand onshore.”

The rupiah dropped 0.4 percent to 9,445 per dollar as of 9:17 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. That was the biggest decline since June 26. One-month implied volatility, which measures exchange-rate swings used to price options, held at 8.25 percent.

The nation recorded a trade deficit of $486 million in May, official data showed last week.

The yield on the government’s benchmark 10-year bonds climbed one basis point, or 0.01 percentage point, to 6.11 percent, the highest level since June 29, data compiled by Bloomberg show.

To contact the reporter on this story: Yudith Ho in Singapore at

To contact the editor responsible for this story: Sandy Hendry at

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