Rupiah Erases Gains After Government Signals Deficit May Widen
Indonesia’s rupiah erased gains after a government official indicated the budget deficit may widen this year as energy prices rise.
The currency traded near a two-month low after Vice Finance Minister Anny Ratnawati told reporters today the shortfall may climb to 2.1 percent of gross domestic product due to increased fuel and electricity subsidies, higher than the government’s assumption of 1.8 percent. The rupiah earlier climbed as much as 0.2 percent as economists predict data this week will show inflation eased for a fifth month in June.
“Concern about the budget deficit caused some negative sentiment in the market,” said Mika Martumpal, a currency analyst at PT Bank Commonwealth in Jakarta. “Earlier, expectations that inflation will be slower this month supported the rupiah.”
The rupiah was little changed at 8,629 per dollar as of 3:57 p.m. in Jakarta, compared with 8,628 yesterday, according to data compiled by Bloomberg. It earlier fell to 8,633, the weakest level since April 27.
Indonesia’s consumer prices increased 5.60 percent this month from a year earlier, after climbing 5.98 percent in May, according to the median estimate of economists surveyed by Bloomberg before the data on July 1.
Overseas investors increased holdings of Indonesian government bonds on June 24 after selling the debt in the previous four days, according to data from the finance ministry. Foreign ownership of the securities climbed 20 percent this year to 234.24 trillion rupiah ($27.2 billion).
Indonesia’s 10-year government bonds dropped for a second day. The yield on the 8.25 percent note maturing in July 2021 climbed one basis point, or 0.01 percentage point, to 7.57 percent, according to prices from the Inter-Dealer Market Association.
To contact the reporter on this story: Suryani Omar in Jakarta at somar6@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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