Rupiah Falls on Safe-Haven Demand as Global Sentiment Worsens

Indonesia’s rupiah dropped, leading a loss in Asian currencies this year, as investors sought the relative safety of government debt and the dollar amid deteriorating global sentiment.

The average yield on U.S., Japanese and European bonds fell to a record, while a Bloomberg index tracking the dollar touched the highest level since its inception in 2004. Investors are waiting for the release of the Federal Reserve’s Dec. 16-17 meeting minutes today, which may give a clearer sign on when U.S. policy makers will raise interest rates. Brent crude extended its drop, falling below $50 a barrel for the first time in almost six years.

The rupiah declined 0.6 percent to close at 12,739 a dollar in Jakarta, prices from local banks show. The currency fell to 12,759 earlier, the weakest level since Dec. 17, and has lost 2.8 percent in 2015.

“We see the rupiah trending down past 13,000 this quarter as the market prices in the Fed meeting minutes, then stabilizing around that level,” said Heru Irvansyah, an economist at PT BNI Securities in Jakarta. “If oil remains near $50 a barrel then the rupiah will continue to be under pressure as investors sell riskier assets and seek safe havens.”

Overseas investors have sold $47 million more Indonesian stocks than they bought so far in January, adding to the $634 million outflow in December, exchange data show.

One-month non-deliverable rupiah forwards declined 0.5 percent to 12,827 a dollar, data compiled by Bloomberg show. Bank Indonesia set a fixing used to settle the contracts at 12,732, compared with 12,658 yesterday.

The yield on Indonesian government bonds due September 2025 fell one basis point, or 0.01 percentage point, to 8.12 percent, prices from the Inter Dealer Market Association show.

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