Rupiah Falls for a Third Day After Investors Cut Debt Holdings

Indonesia’s rupiah declined for a third straight day after global investors cut holdings of the nation’s bonds by the most since September.

International funds reduced their investment in government notes by 8.99 trillion rupiah ($986 million) in February, according to data from the finance ministry. The Bloomberg- JPMorgan Asia Dollar Index fell for a second straight day after Spain raised its budget deficit target to 5.8 percent for 2012, compared with the 4.4 percent previously agreed with its European partners.

“The news from Spain signals that there is still an ongoing debt issue in Europe,” said Apressyanti Senthaury, a Jakarta-based research analyst in the treasury division of PT Bank Negara Indonesia. “Bank Indonesia will keep the rupiah from weakening too drastically.”

The rupiah lost 0.5 percent to 9,128 per dollar as of 3:53 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg.

The central bank has been intervening in the currency and bond markets to curb volatility, Governor Darmin Nasution said on Feb. 10.

The yield on the government’s 7 percent bonds due May 2022 fell five basis points, or 0.05 percentage points, to 5.51 percent, according to midday prices from the Inter Dealer Market Association.

To contact the reporters on this story: Yudith Ho in Singapore at yho35@bloomberg.net.

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

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