Rupiah Falls to One-Month Low After Failed Auction; Bonds Steady
Indonesia’s rupiah fell to a one-month low after a government debt auction failed to meet its target yesterday and global funds pulled money from the nation’s shares. Sovereign bonds were little changed.
The finance ministry failed to raise the amount it targeted for a fifth straight Islamic debt auction yesterday, selling Rp 460 billion ($48 million) of Shariah-compliant notes, short of its Rp 500 billion goal, the debt management office said. Foreign investors sold $28 million more local stocks than they bought in the first two days of this week, exchange data show.
“The auction creates negative sentiment for Indonesia’s bond market and the halted capital flows into stocks also weigh on the rupiah,” said Nurul Eti Nurbaeti, the Jakarta-based head of treasury research at Bank Negara Indonesia. “Near the end of the month, there will usually be more dollar demand from importers and corporations.”
The rupiah weakened 0.5 percent to 9,516 per dollar as of 8:52 a.m. in Jakarta, prices from local banks compiled by Bloomberg show. It touched 9,521, the lowest level since June 25. One-month implied volatility, which measures exchange-rate swings used to price options, held at 8 percent.
Economic data scheduled for the start of August may show “moderate inflation and a still weak external sector,” prompting “offshore investors to remain cautious on the local-currency bond market,” Joey Cuyegkeng, a Manila-based economist at ING Groep NV, wrote in a report yesterday.
The yield on the government’s benchmark 10-year bonds was steady at 5.81 percent, according to data compiled by Bloomberg.