Rupiah Slides Most for Week in Four Months on Stocks Outflows

Indonesia’s rupiah had its biggest weekly loss since August as the prospect of an increase in U.S. interest rates boosted demand for dollars.

The currency weakened 1.3 percent from Dec. 5 to close at 12,458 a dollar in Jakarta, a third week of declines and the steepest drop since the period ended Aug. 1, prices from local banks show. It fell 0.9 percent today and reached 12,460 earlier, the lowest level since December 2008.

Global funds sold $114 million more Indonesian shares than they bought this week through yesterday, exchange data show. That’s the biggest outflow since the five days ended Oct. 17. U.S. retail sales rose the most in eight months in November, data showed yesterday, adding to signs of a pickup in the world’s largest economy as the Federal Reserve considers its first interest-rate increase since 2006.

“Better U.S. data saw investors repositioning their portfolio,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “A combination of the stronger dollar and thin onshore liquidity toward the year-end are weighing on the rupiah.”

Bank Indonesia left its benchmark interest rate at 7.75 percent yesterday, pausing after a surprise increase last month. A gauge of dollar strength was set for its first weekly decline in almost two months.

Forwards, Bonds

One-month non-deliverable rupiah forwards traded offshore dropped 1.2 percent today and 1 percent this week to 12,576, data compiled by Bloomberg show. The central bank set a fixing used to settle the contracts at 12,432, compared with 12,296 on Dec. 5.

Global investors pulled 9.2 trillion rupiah ($739 million) from Indonesia’s sovereign bonds this month through Dec. 10, according to the latest finance ministry data.

The yield on government notes due March 2024 climbed 31 basis points, or 0.31 percentage point, this week to 8.16 percent, prices from the Inter Dealer Market Association show. That’s the biggest increase since January. The rate, which rose 14 basis points today, is at its highest level since Oct. 17.

“There’s concern about dollar funding toward the year-end and countries with a current-account deficit like Indonesia tend to feel more pressure,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Bank Ltd. in Tokyo. “But I don’t think the rupiah will see a rapid decline from here.”

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