Rupiah falls further on capital outflow, strong dollar demand
Rupiah falls further on capital outflow, strong dollar demand
Agencies, Jakarta
The rupiah on Monday continued last week's slide, ending lower on capital outflows from the country and on dollar demand from oil importers, according to dealers.
The local unit closed at 9,575 a dollar, the lowest level in more than 10 months, according to Bloomberg data. The rupiah ended at Rp 9,535 last Friday.
Dealers said demand for the dollar was robust as investors pulled out their money from Indonesian stock and bond markets on expectations of further local rate hikes.
The biggest drop in the Jakarta Composite Index since May also attributed to the rupiah's continued drop.
"The sharp decline in stocks is leading to speculation foreign investors will sell more shares, weighing on the currency," said Tetsuo Yoshikoshi, market analyst of the treasury unit in Singapore at Sumitomo Mitsui Banking Corp., a unit of Japan's third-biggest lender, as reported by Dow Jones.
The Index declined 3.1 percent.
According to the stock exchange, overseas investors sold net $11.7 million of Indonesian shares last week -- the most since the seven days ended March 25.
The central bank earlier this month raised the rate on its one-month Bank Indonesia Sertifikat notes to 7.53 percent from 7.44 percent in an effort to rein in inflation with the rupiah struggling.
State-owned oil and gas company Pertamina was allegedly among the main dollar buyers to finance imports of petroleum products, the dealers said.
Indonesia is a member of the Organization of Petroleum Exporting Countries (OPEC) but has been a net oil importer in the past few years due to dwindling crude oil production and rising petroleum product demand.
Bank Indonesia sold dollars on Monday to slow the rupiah's slide, dealers said.
The nation's central bank has said recently that it would unload the U.S. currency to reduce market volatility.
Dealers expect the dollar to trade between Rp 9,550 and Rp 9,600 on Tuesday.