Indonesia’s rupiah fell for a fourth day as investors favored safer bets than emerging-market assets amid concern an unprecedented levy on bank deposits in Cyprus will reignite Europe’s debt crisis.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active regional currencies excluding the yen, touched a five-month low after European finance ministers reached an agreement on March 16 to force depositors in Cypriot banks to share the cost of the latest bailout. Indonesia’s exchange rate can be managed through intervention, controlling the supply of foreign currency and forming an onshore spot reference, Perry Warjiyo, who was approved by lawmakers to become a deputy governor at the central bank, said on March 15.
“The rupiah is weighed by across-the-board declines in Asian currencies due to short-term risk aversion,” said Suriyanto Chang, the head of treasury at PT Bank QNB Kesawan in Jakarta. “There is huge potential that if the rupiah dips below 9,730 per dollar that the central bank may step in and try to smoothen the weakening.”
The rupiah dropped 0.1 percent to 9,713 per dollar as of 3:37 p.m. in Jakarta, prices from local banks compiled by Bloomberg show. One-month non-deliverable forwards weakened 0.1 percent to 9,750, according to data compiled by Bloomberg.
A daily fixing used to settle the derivatives was set at 9,718 by the Association of Banks in Singapore, compared with 9,704 on March 15.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 37 basis points, or 0.37 percentage point, to 5.82 percent.
The yield on the government’s bonds maturing in May 2023 fell one basis point to 5.47 percent, prices from the Inter Dealer Market Association show.