Bloomberg News

Rupiah Drops as Concerns About Europe Crisis Deter Risk-Taking

November 19, 2012

Indonesia’s rupiah fell for a third day as concerns Europe will be unable to prevent its debt crisis from worsening damped demand for riskier assets.

Finance ministers from Europe will meet in Brussels tomorrow to discuss the next aid payout to Greece amid a disagreement between the European Union and the International Monetary Fund over softening the nation’s debt target, casting doubt over whether the IMF would keep providing finance. Foreign funds sold $315 million more Indonesian stocks than they bought this month, according to exchange data.

“People are looking at what Europe will announce on Greece’s bailout tranche and, more crucially, whether the IMF and Europe will see eye-to-eye on the haircut issue,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “These issues are clouding the picture.”

The rupiah fell 0.1 percent to 9,639 per dollar from Nov. 14 as of 3:04 p.m. in Jakarta, prices from local banks compiled by Bloomberg show. Indonesia’s financial markets were shut Nov. 15 and Nov. 16 for public holidays. One-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 4.70 percent.

Indonesia’s growth will outperform its neighbors, with a 6.4 percent annual rate of expansion from 2013 to 2017, equal to that recorded in the two decades before the 1997 Asian financial crisis, Paris-based Organization for Economic Cooperation and Development said in a report released in Phnom Penh yesterday.

The yield on the government’s 7 percent bonds maturing in May 2022 rose one basis point to 5.41 percent from Nov. 14, according to prices from the Inter Dealer Market Association.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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