Indonesia’s Rupiah Erases Decline After Central Bank Intervenes Indonesia’s rupiah halted a slide that pushed it to the weakest level since the Asian financial crisis after the central bank intervened to stem losses. The rupiah closed up 0.1 percent at 12,680 per dollar after dropping as much as 1.9 percent earlier, prices from local banks compiled by Bloomberg show. It fell 1.9 percent yesterday, recording its lowest finish since August 1998. In the offshore market, one-month non-deliverable forwards rose 0.8 percent to 12,980 after declining 5 percent in the last two trading days. The Indonesian currency’s loss yesterday was dwarfed by a 9.7 percent plunge in Russia’s ruble, which prompted the country’s central bank to raise its benchmark interest rate by 6.5 percentage points to 17 percent. The lack of domestic demand for dollars today caused the rupiah to recover and the central bank also “came into the market,” said Wiling Bolung, head of balance-sheet trading at PT Bank ANZ Indonesia. “That’s a regular thing they do,” he said in Jakarta. “The Russian ruble was the main trigger” for the rupiah’s losses, Bolung said, adding that it was an “over-reaction by some people.” Bank Indonesia is intervening today to stabilize the rupiah and is also buying government bondsin the secondary market, Deputy Governor Perry Warjiyo told reporters at a press conference in Jakarta. The monetary authority bought 200 billion rupiah ($16 million) of debt today and 1.5 trillion rupiah yesterday, he said. Spillover Effect Turkey’s lira fell 3.3 percent yesterday and South Africa’s rand lost 1.4 percent. Investors withdrew more than $2.5 billion from U.S. exchange-traded funds that buy emerging-market stocks and bonds last week, the biggest outflow since January. “This has spilled over into Asian currencies, which has seen the rupiah continuing to weaken,” Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. inSingapore, said before the currency pared losses. “We have seen portfolio outflows from Indonesian bonds and equities, with thin liquidity due to the year-end exacerbating the moves.” Overseas investors pulled 10.2 trillion rupiah from rupiah sovereign debt this month through Dec. 12 and $240 million from local stocks as of yesterday, finance ministry and exchange data show. TheJakarta Composite Index (JCI) of shares dropped 1.6 percent today following a 1 percent decline yesterday. Bonds Drop Finance Minister Bambang Brodjonegoro said today that, while it’s concerning, the current situation with the rupiah is temporary. The yield on the government notes due March 2024 was steady at 8.45 percent after increasing 43 basis points in the last two days, according to prices from the Inter Dealer Market Association. Bank Indonesia lowered a fixing used to settle forward contracts by 2.3 percent to a record 12,900 per dollar, the biggest decline since the rate was introduced in May 2013. One-month implied volatility, a measure of expected swings in the exchange rate used to price options, advanced as much as 2.18 percentage points to 14.81 percent, the highest since January. The rupiah forwards traded as much as 2.9 percent weaker than the onshore spot rate yesterday, the biggest gap since September 2013. The difference was 2.3 percent today. Southeast Asia’s largest economy will expand 5.1 percent in 2014, the slowest pace since 2009, according to the median estimate of analysts in a Bloomberg survey. Inflation accelerated to 6.23 percent in November as President Joko Widodo raised the price of subsidized fuel, and the central bank sees it reaching 7.7 percent to 8.1 percent by year-end. “The depreciation pressure on the rupiah is from the net selling of local bonds,” said Craig Chan, head of foreign-exchange strategy for Asia ex-Japan at Nomura Holdings Inc. in Singapore. Weak economic growth and quickening inflation are also concerns, he said. To contact the reporters on this story: Andrew Janes in Jakarta at [email protected]; Yumi Teso in Bangkok at [email protected]; Lilian Karunungan in Singapore [email protected] To contact the editors responsible for this story: James Regan at [email protected] Simon Harvey
Posted on: Tue, 16 Dec 2014 20:37:21 +0000
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