Rupiah Has Biggest Monthly Loss Since 2009 on Europe Debt Woes

Indonesia’s rupiah had its biggest monthly decline since February 2009 on concern Europe’s worsening debt crisis will slow global economic growth. Government bonds dropped the most since January.

Bank Indonesia plans to boost “intervention” in the market to support the rupiah, Governor Darmin Nasution said in Jakarta today, a day after the currency reached a 17-month low. The central bank is committed to buying government bonds in the secondary market Perry Warjiyo, director for economic research and monetary policy, said yesterday. The monetary authority unexpectedly reduced its benchmark interest rate by 50 basis points to 6 percent on Nov. 10 to boost growth.

“On the euro-zone worries, the markets have been looking for positive signals,” said Radhika Rao, an economist at Forecast Pte in Singapore. “The rate cut was premature, so that is playing on the minds of investors. There are constraints to how much the central bank can intervene in the market.”

The rupiah slid 3.5 percent this month to 9,170 per dollar as of 3:15 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. It fell 0.2 percent today and reached 9,240 yesterday, the weakest level since June 2010.

Italy had to pay more than 7 percent for its debt this week, while Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. had their long-term credit grades reduced to A- from A by Standard & Poor’s yesterday.

Bank Indonesia lowered its 2012 economic growth forecast to 6.3 percent from 6.7 percent because of the global slowdown, Halim Alamsyah, a deputy governor at the central bank, said in Jakarta today.

The yield on the government’s benchmark 8.25 percent notes due July 2021 increased 39 basis points, or 0.39 percentage point, this month to 6.73 percent today, according to midday prices by the Inter-Dealer Market Association. The rate fell 12 basis points today.

Foreign ownership of Indonesian government debt fell to 217.17 trillion rupiah ($23.6 billion) this month as of Nov. 28, from 219.78 trillion at the end of last month, according to finance ministry data.

To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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