Rupiah Falls for Second Day on Europe Debt Concern; Bonds Steady

Indonesia’s rupiah weakened for a second day on concern Europe’s debt crisis will worsen and damp demand for the nation’s assets.

The rupiah fell 0.2 percent to 9,485 per dollar as of 3:19 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency reached 9,496 earlier, the weakest since July 27, and lost 4.4 percent this year. One-month implied volatility, which measures exchange-rate swings used to price options, was steady at 7.50 percent.

Standard & Poor’s said yesterday it may lower Greece’s credit rating if the country is unable to obtain its next aid package. Indonesian exports dropped 16.4 percent in June from a year earlier, the biggest decline since 2009, official data showed last week. Government bonds were little changed before a policy meeting tomorrow, at which 25 of 26 economists surveyed by Bloomberg predict Bank Indonesia will hold its reference rate at 5.75 percent. One expects a 25 basis point cut.

“Global sentiment is weighing on the rupiah,” said Putu Andi Wijaya, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta. “A rate hold would be in line with expectations. A cut is possible but unlikely because of the fragile rupiah.”

The yield on the government’s 7 percent bonds due May 2022 was little changed at 5.73 percent, the highest level since July 30, according to prices from the Inter Dealer Market Association.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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