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Rupiah Drops to Weakest Level Since 2009 After Failed Debt Sale

Indonesia’s rupiah dropped to the weakest level since March 2009 after the nation missed its fundraising target at a domestic dollar debt sale amid concern the Federal Reserve will bring forward a plan to cut stimulus.

The government raised $190 million from the bond sale yesterday, short of the $450 million goal, said Robert Pakpahan, director general at the debt management office. Global funds sold a net $361 million of Indonesian stocks this month through yesterday, while the benchmark index declined by the most since September today.

“We expect to see the rupiah weakening, keeping in view the Fed-tapering risk,” said Andy Ji, currency strategist at Commonwealth Bank of Australia in Singapore. “There’s been damage to confidence recently, so the government may look to do another sale of the bonds when conditions stabilize.”

The rupiah fell 0.2 percent to 11,763 per dollar as of 4:16 p.m. in Jakarta, prices from local banks show. It reached 11,798 earlier, the weakest level since March 20, 2009. One-month non-deliverable forwards dropped 0.2 percent to 11,617, 1.3 percent stronger than the onshore spot rate.

A fixing used to settle the forwards was set at 11,495 per dollar today, the same as yesterday, according to the Association of Banks in Singapore. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, lost six basis points, or 0.06 percentage point, to 14.29 percent.

The yield on the government’s 5.625 percent rupiah bonds due May 2023 declined one basis point to 8.58 percent, prices from the Inter Dealer Market Association show.

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

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

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