Indonesia’s rupiah completed its steepest weekly decline since May on concern Southeast Asia’s largest economy is slowing.
Nomura Holdings Inc. cut its 2015 growth forecast to 4.5 percent from 4.8 percent on July 21, after official data last week showed Indonesia’s exports shrank for a ninth month in June and imports contracted. Central Bank Governor Agus Martowardojo said July 14 that second-quarter expansion will be “more or less” the same as in the first three months, when gross domestic product rose 4.7 percent, the least since 2009.
“Back in May, we expected 5 percent growth for the second quarter, but that’s pretty much impossible now,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore. “We see downside risk as imports are falling even as Indonesia needs to import capital goods to invest for growth. Rupiah weakness is going to cause a lot more pain than gain in the short term.”
The rupiah slid 0.7 percent from July 15 to close at 13,446 a dollar, prices from local banks show. Local financial markets were shut July 16-21 for public holidays. The currency fell 0.2 percent on Friday and reached 13,463 earlier, the weakest level since August 1998. This week’s drop was the biggest since the period ended May 8.
The nation raised 1.25 billion euros ($1.37 billion) from a sale of 10-year bonds, receiving bids for 1.9 times the amount sold, according to a Finance Ministry statement. The notes were sold at 3.555 percent.
The yield on local-currency government bonds due September 2026 fell two basis points from July 15 to 8.26 percent, according to Inter Dealer Market Association. It was steady on Friday.