Indonesia’s rupiah fell the most in four weeks to lead losses in Asia on concern the nation will be vulnerable to outflows if the Federal Reserve raises borrowing costs next week.
There’s a 78 percent probability that U.S. interest rates will be increased at the Federal Open Market Committee meeting on Dec. 15-16, futures contracts show. Indonesia’s persistent current-account deficit, sluggish economy and a slump in prices for commodities like coal and palm oil have made the rupiah the worst-performing currency in Asia this year after Malaysia’s ringgit.
The rupiah weakened 0.5 percent, the most since Nov. 9, to 13,941 a dollar at the close in Jakarta, according to prices from local banks. The currency has dropped 2.4 percent in the past month, the most in Asia, and is down 11 percent this year.
“Given that we’re heading into next week’s FOMC, in the event of dollar strength emerging currencies like the rupiah will be one of those affected," said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. China’s slowdown, a bleak outlook for commodity prices and the need to import more for big infrastructure projects will weigh on the rupiah, she said.
Foreign funds have sold $645 million more Indonesian shares than they’ve bought this quarter, taking outflows this year to $1.5 billion, exchange data show. Overseas investors have pumped the equivalent of $6.5 billion into the nation’s local-currency debt in 2015, according to Finance Ministry figures.
Government bonds declined, pushing the 10-year yield up five basis points to 8.58 percent, according to the Inter Dealer Market Association.