Rupiah Drops for Second Day on Term-Deposit Demand; Bonds Steady
Indonesia’s rupiah dropped for a second day after demand for the central bank’s dollar term deposits fell short of market expectations. Government bonds were little changed.
Bank Indonesia accepted $700 million of seven- and 14-day deposits yesterday at 0.17 percent and 0.18 percent, it said in a statement, compared with rates in the US of 0.23 percent for one week and 0.24 percent for 15 days. The measure was predicted to provide an avenue for lenders to bring back an estimated $2 billion a day on average that is now being kept in overseas banks and reduce volatility in the local currency, Deputy Governor Halim Alamsyah said on May 29.
“Demand was not too strong,” said Klara Pramesti, a research analyst in the treasury division at Bank Negara Indonesia in Jakarta. “Investors still tend to seek safe havens so whatever instruments we introduce will not see much effect until global conditions stabilize.”
The rupiah weakened 0.5 percent to 9,470 per dollar as of 8:54 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency was little changed for the week. One-month implied volatility, which measures exchange-rate swings used to price options, held at 12.5 percent.
DBS Group Holdings lowered its forecast for the rupiah to 9,800 for the third quarter, from 9,200 previously because of Europe’s debt crisis, analysts led by David Carbon wrote in a research report today.
The yield on the government’s benchmark 10-year bonds held at 6.44 percent, after falling five basis points, or 0.05 percentage point, this week, data compiled by Bloomberg show.