Bloomberg News

Rupiah Touches Four-Week Low, Bonds Decline on China Slowdown

July 23, 2012

Indonesia’s rupiah touched a four- week low and government bonds declined on concern growth in the world’s second-largest economy may slow further, reducing appetite for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index dropped to a one- week low after Song Guoqing, a Chinese central bank adviser, said on July 21 that growth may slow to 7.4 percent this quarter from 7.6 percent in the previous three-month period. China is the largest market for Indonesian exports.

“Negative external sentiment still weighs on the rupiah,” said Gusti Kahari, a foreign-exchange dealer at PT Bank Artha Graha Internasional in Jakarta. “The rupiah has room to strengthen as Indonesia is still relatively attractive in terms of risk-reward.”

The rupiah weakened 0.1 percent to 9,460 per dollar as of 3:36 p.m. in Jakarta, prices from local banks compiled by Bloomberg show. The currency touched 9,519 earlier, the lowest level since June 25. One-month implied volatility, which measures exchange-rate swings used to price options, held at 8 percent.

The yield on the government’s 7 percent bonds due May 2022 climbed five basis points, or 0.05 percentage point, to 5.78 percent, according to prices from the Inter Dealer Market Association. That was the biggest advance since May 24.

To contact the reporter on this story: Yudith Ho in Jakarta at yho35@bloomberg.net

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


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