Rupiah, stocks retreat amid global declines

Indonesian currency and stock prices closed lower on Tuesday despite their upward movement in early trade as investors squared positions ahead of the year-end holidays.

The rupiah dropped to a one-week low on speculation that importers are increasing dollar purchases before year-end bills. Bonds gained.

Bloomberg reported that the currency snapped a three-day rally after finance ministry data showed that global funds cut ownership of Indonesian government debt by 1 percent in the week through Dec. 20 to Rp 221.8 trillion (US$24.2 billion).

The rupiah has dropped 1.1 percent this year and is heading for its first annual decline since 2008.

“Dollar liquidity is generally thin at the end of the year,” Saktiandi Supaat, foreign-exchange research director at Malayan Banking Bhd. in Singapore, told Bloomberg.

The rupiah slipped 0.6 percent from Dec. 23 to 9,110 to the dollar as of 3:15 p.m. in Jakarta according to prices from local banks compiled by Bloomberg. It touched 9,200, the weakest level since Dec. 15. Local financial markets were closed yesterday for a public holiday.

The rupiah is expected to decline to 9,150 by the end of March, Saktiandi predicted.

The yield on the government’s benchmark 8.25 percent notes due July 2021 fell five basis points from Dec. 23 to 6.05 percent today, according to the Inter-Dealer Market Association.

Stock prices at the Indonesian Stock Exchange also dropped amid declines in share prices in other regional markets.

The IDX’s Jakarta Composite Index rose in early trading amid substantial purchases on several capitalized stocks, dealers said. However, the trading changed direction just an hour following the market’s opening amid the fall in share prices in other Asian markets.

The JCI index slid 0.2 percent to 3,789.43 at the close of trading, paring this year’s gain to 2.3 percent. The market was closed Monday for a public holiday. The top losers included rubber producers PT Perusahaan Perkebunan London Sumatra Indonesia (LSIP IJ) which lost 1.1 percent to Rp 2,225. PT Bakrie Sumatra Plantations (UNSP IJ) retreated 3.5 percent to Rp 280. PT Bumi Resources (BUMI IJ), Asia’s largest exporter of power-station coal, advanced 1.2 percent to Rp 2,175, the most since Dec. 14.

Asian shares eased on Tuesday as investors squared positions in thin volume before the US markets reopened after a long weekend and investors sought fresh data that could possibly offer clues about the prospects for the future of the world’s largest economy.

MSCI’s broadest index of Asia Pacific shares outside Japan slipped 0.3 percent. This is down 17 percent for the year, far less than the 50 percent plunge it had in 2008 when the collapse of Lehman Brothers roiled global financial markets. Japan’s Nikkei stock average closed down 0.5 percent in light trading. The Tokyo benchmark is down 17 percent this year. Markets in Hong Kong, Australia and UK remained closed on Tuesday.