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.
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