SINGAPORE: The Indonesian rupiah fell 1 percent to a near 4-1/2-year low on Wednesday amid dollar bids from local companies for month-end payments, though traders said central bank intervention curbed losses in the worst performing Asian currency of the year.
The rupiah fell to 11,577 per dollar, near Tuesday's low of 11,580, its weakest since April 2009. The Indonesian currency closed the previous session at 11,460.
The decline came after State-owned Enterprises Minister Dahlan Iskan told Reuters on Tuesday that the country will temporarily allow state-owned firms, including oil company PT Pertamina, to hedge some foreign exchange exposure in view of the recent sharp falls in the rupiah.
"It will just add up dollar demand in the market," said a Jakarta-based trader.
"Importers will need to take turns to buy dollars. Exporters will just sell dollars patiently at better levels," the trader added.
The rupiah has been the worst performing Asian currency with a near 17 percent slide against the dollar, according to Thomson Reuters data.
It is seen as more vulnerable to the Federal Reserve's expected reduction in its bond-buying stimulus than other emerging currencies due to Indonesia's current account deficit.
Authorities have taken various steps in recent months in a bid to prop up the ailing currency, including rate hikes totaling 150 basis points in the benchmark rate.
Bank Indonesia also hopes to line up a currency swap deal with South Korea in addition to one it is expected to sign next week with China.
Some foreign investors bought the country's bonds on such efforts, mainly to seek higher yields, traders and analysts said.
On Tuesday, Indonesia's finance ministry raised 12.0 trillion rupiah ($1.05 billion) of bonds at an auction, well above an indicative target of 8 trillion rupiah.
Foreign investors raised their holdings of the country's bonds by 4.2 trillion rupiah in the first 23 days of September, according to the government data.
Still, the rupiah is seen staying under pressure, traders and analysts said.
"The support from swap lines and bond market rally is likely to be brief when September foreign exchange reserve data is out next week and ahead of the BI meeting the following week," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
"The key impediment to any improvement in the rupiah outlook is the widening current account deficits," Ji added.
Comments
Comments are closed for this article.