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Jakarta Post

Rupiah drops most in a month

Indonesia’s rupiah fell the most in a month as the Federal Reserve’s decision to end its stimulus program spurred bets it’s on course to raise interest rates

The Jakarta Post
Jakarta
Fri, October 31, 2014

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Rupiah drops most in a month

I

ndonesia'€™s rupiah fell the most in a month as the Federal Reserve'€™s decision to end its stimulus program spurred bets it'€™s on course to raise interest rates.

The Fed cited an improving US labor market as it halted bond purchases, known as quantitative easing (QE), that drove fund flows to emerging markets, according to a statement in Washington Wednesday.

'€œThe Fed'€™s decision to end QE shows it remains on track to normalizing its monetary policy,'€ said Heru Irvansyah, an economist at PT BNI Securities in Jakarta. '€œThis will cause a shift of funds from emerging markets to the US, which will put some pressure on onshore dollar supply.'€

The rupiah dropped 0.6 percent, most since Sept. 29, to 12,149 per dollar as of 9:31 a.m. in Jakarta, prices from local banks show. In the offshore market, one-month non-deliverable forwards lost 0.5 percent to 12,215, 0.5 percent weaker than the onshore spot rate, according to data compiled by Bloomberg.

The nation'€™s 8.375 percent bonds due March 2024 fell for a fourth day, pushing the yield to rise two basis points to 8.13 percent, according to

the Inter Dealer Market Association. That'€™s the highest level since Oct. 17.

 

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