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Rupiah Drops on Fed Rate Concern as GDP Report Trails Estimates

Updated on
  • Indonesian growth picked up only slightly in third quarter
  • Weak commodity prices still hurting Indonesian exports

The rupiah fell amid renewed concern the Federal Reserve will raise borrowing costs this year and as Indonesia released gross domestic product figures that trailed estimates.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rose on Wednesday as Fed Chair Janet Yellen and New York Fed President William Dudley both said the U.S. central bank could increase interest rates in December. Indonesia’s economy grew 4.73 percent last quarter, a report showed Thursday, compared with 4.67 percent in the previous three months and the 4.8 percent median estimate in a Bloomberg survey.

The rupiah fell 0.1 percent to 13,565 a dollar at the close in Jakarta, according to prices from local banks, after dropping as much as 0.6 percent earlier. The currency has advanced 1 percent this month following a 7 percent surge in October that was the biggest in emerging markets worldwide.

“Yellen’s comments led to a strengthening of the dollar against Asian currencies," said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. “Commodity prices are still weighing on the overall outlook of the economy” in Indonesia and a strong recovery is unlikely this year, she said before the release of the GDP data.

A Bloomberg gauge of 22 raw materials is down 1.1 percent in October and 16 percent since June. Shipments from Indonesia, a major exporter of palm oil and coal, contracted in each of the last 12 months through September.

Ten-year government bonds rose, pushing the yield on the notes due September 2026 down three basis points to 8.70 percent, according to the Inter Dealer Market Association. The two-year yield fell three basis points to 8.42 percent.

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