Rupiah Falls for Second Day on Europe Debt Concern; Bonds Steady
Indonesia’s rupiah weakened for a second day on concern Europe’s debt crisis will worsen and damp demand for the nation’s assets.
The rupiah fell 0.1 percent to 9,480 per dollar as of 10:04 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency has lost 4.4 percent this year. One- month implied volatility, which measures exchange-rate swings used to price options, was steady at 7.50 percent.
Standard & Poor’s said yesterday it may lower Greece’s credit rating if the country is unable to obtain its next aid package.
Indonesian exports dropped 16.4 percent in June from a year earlier, the biggest decline since September 2009, official data showed last week. Government bonds were little changed before a policy meeting tomorrow, at which 25 of 26 economists surveyed by Bloomberg predict Bank Indonesia will maintain its reference rate at 5.75 percent. One expects a 25 basis point cut.
“Global sentiment is weighing on the rupiah,” said Putu Andi Wijaya, a foreign-exchange dealer at Bank Rakyat Indonesia in Jakarta. “A rate hold would be in line with expectations. A cut is possible but unlikely because of the fragile rupiah.”
The yield on the government’s benchmark 10-year bonds was 5.73 percent, the highest level since July 30, data compiled by Bloomberg show.