Indonesian Rupiah Set for Worst Week Since May; Bonds Decline
Indonesia’s rupiah was headed for its biggest weekly loss since May as a worsening debt crisis in Europe curbed risk-taking and bolstered demand for dollars. Government bonds declined.
Offshore investors sold $126 million more local stocks than they purchased this week through yesterday, exchange data show. The finance ministry failed to raise the amount it targeted for a fifth straight Shariah-compliant bond auction this week, selling Rp 460 billion ($48 million) of Islamic notes, short of its 500 billion rupiah goal, the debt management office said. The MSCI Asia-Pacific Index of shares had its lowest close in almost seven weeks on July 25.
“The pullout from Indonesian and regional stocks shows that concern over Europe remains high,” said Klara Pramesti, a Jakarta-based research analyst in the treasury division at Bank Negara Indonesia. “The rupiah is also weighed down by corporate demand for dollars near the end of the month.”
The rupiah slid 0.4 percent this week to 9,490 per dollar as of 9:13 a.m. in Jakarta, the most since the five days ended May 25, prices from local banks compiled by Bloomberg show. It rose 0.1 percent today, snapping a four-day losing streak. The currency reached a one-month low of 9,526 on July 25.
One-month implied volatility, which measures exchange-rate swings used to price options, has held at 8 percent for almost two weeks.
The government’s benchmark 10-year bonds were headed for the first weekly loss in more than two months. The yield on the securities climbed seven basis points this week, or 0.07 percentage point, to 5.79 percent, according to data compiled by Bloomberg. The yield fell one basis point today.