Rupiah Weakens After Fed Refrains from Stimulus, Bonds Steady

Indonesia’s rupiah declined for a second day after the Federal Reserve refrained from taking action to spur growth in the world’s largest economy, damping demand for emerging-market assets. Government bonds were steady.     

The Federal Open Market Committee said the US economy slowed in the first half and it would provide fresh stimulus if necessary, following a two-day meeting in Washington. The European Central Bank will meet in Frankfurt today to discuss ways to tackle the region’s debt crisis, after President Mario Draghi said last week that he would do “whatever it takes” to preserve the euro.       

“Markets are disappointed by the Fed meeting, causing declines in regional currencies,” said Nurul Eti Nurbaeti, the Jakarta-based head of treasury research at PT Bank Negara Indonesia. “The moves will be limited as investors wait for the outcome of the ECB meeting. Draghi pledged to do whatever it takes, but he has few feasible options.”       

The rupiah weakened 0.1 percent to 9,478 per dollar as of 9:09 a.m. in Jakarta, prices from local banks compiled by Bloomberg show. One-month implied volatility, which measures exchange-rate swings used to price options, held at 7.5 percent.      

The yield on the benchmark 10-year bonds was steady at 5.72 percent, data compiled by Bloomberg show.  

Bloomberg