Indonesian bonds dropped, pushing the 10-year yield to the highest level since December, as concern that Greece will default and leave the euro area damped appetite for emerging-market assets. The rupiah weakened.
Global funds pared 3.77 trillion rupiah ($407 million) from their holdings of local sovereign securities last week through May 10, government data show. Greece’s largest anti-bailout party, Syriza, declined to join a unity government yesterday as the country heads toward a possible exit from the euro area. The finance ministry was scheduled to raise 6 trillion rupiah from a debt auction today, according to a statement on its website.
“Investors are still looking for safer investments, mainly due to global concerns,” said Artanavaro Gasali, the Jakarta-based head of global markets at PT Bank ICBC Indonesia. “We’ve seen heavy selling from foreign investors.”
The yield on the government’s 7 percent bonds due May 2022 climbed six basis points, or 0.06 percentage point, to 6.31 percent, according to final prices from the Inter Dealer Market Association. That’s the highest close since Dec. 15. The yield has increased 36 basis points this month.
DBS Group Holdings Ltd. predicts the yield on the nation’s local-currency 10-year bonds will remain above 6 percent “in the near-term on weak global risk appetite,” analysts led by Singapore-based Philip Wee wrote in a report today.
The rupiah declined 0.1 percent to 9,251 per dollar as of 4:24 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency lost 0.7 percent this month. One-month implied volatility, which measures exchange-rate swings used to price options, rose 50 basis points to 8 percent, the highest level since March 30.