Rupiah Drops to Two-Week Low on U.S., European Debt Concern

Indonesia’s rupiah fell to a two- week low after Standard and Poor’s cut the U.S. long-term credit outlook, sapping demand for emerging-market assets.

The currency declined for a second day as the MSCI Asia Pacific Index of regional stocks dropped 1.3 percent. New York- based SandP said there’s a one-in-three chance the AAA credit rating of the U.S. government might be cut within two years unless policy makers agree on a plan to reduce budget deficits and the national debt. The yield on Greece’s two-year bonds rose to more than 20 percent.

“Overnight we had a couple of pieces of bad news; the U.S rating outlook downgrade and ongoing concern about the Greek debt crisis,” said Joanna Tan, a Singapore-based economist at Forecast Singapore Pte.

“That led to overall risk aversion in Asia including Indonesia. Asia is still very much looking toward the major economies for cues.”

The rupiah declined 0.2 percent to 8,687 per dollar as of 9:07 a.m. in Jakarta, according to data compiled by Bloomberg. It fell to 8,693 earlier, the weakest level since April 1. The currency has advanced 3.3 percent this year.
The U.S. was the second largest buyer of Indonesia’s non- oil exports in February, after Japan, according to data from the statistics department.


Bloomberg