Rupiah Falls on Concern China Tightening May Hurt Exports

Indonesia’s rupiah weakened on concern monetary tightening in China will hurt the Southeast Asian nation’s exports.

The currency traded near its lowest level in a week after the People’s Bank of China said yesterday it will increase banks’ reserve requirements by 50 basis points from April 21 to tackle the fastest inflation in 32 months. China was Indonesia’s third-largest non-oil export market in February after Japan and the U.S., official data show.

“China’s tightening may lead to slower growth and that would affect Indonesia’s exports to the country,” said Lindawati Susanto, head of treasury at PT Bank Resona Perdania in Jakarta. “I think the rupiah will trade from 8,660 to 8,690 today.”

The rupiah declined 0.1 percent to 8,673 per dollar as of 8:54 a.m. in Jakarta, according to data compiled by Bloomberg. It reached 8,688 late on April 14 and 15, the weakest level since April 4. The currency has advanced 3.5 percent this year and touched a seven-year high of 8,637 on April 11.

Consumer prices in China gained 5.4 percent in March, compared with a 4.9 percent increase in February, according to official figures released April 15. China’s central bank Governor Zhou Xiaochuan said over the weekend that policy makers will continue monetary tightening for “some time.”


Bloomberg