2009 The Indonesian currency fell1 further on Friday, marking the rupiahs most dramatic weekly drop for more than two years as foreign investors dumped1 risky assets amid fears of worsening conditions in Europe, which officials are concerned4 may seriously impact the Indonesian economy. The rupiah plunged1 2.5 percent this week against the US dollar, the most since June 2009, to Rp 8,806 as of 3:05 p.m. local time on Friday, according to data compiled by Bloomberg. The currency has ranged2 from between Rp 8,400 and Rp 8,900 to the dollar throughout the year, having gained2 almost 6 percent when it reached4 a seven-year high earlier in August. The rupiah was among the regions worst preforming notes this week, just after a 3.1 percent depreciation of the South Korean won. Elsewhere, Malaysias ringgit dropped1 2.4 percent, the Philippine peso dropped1 2.3 percent, Indias rupee slid 1.9 percent and Taiwans dollar fell1 1.2 percent this week. Bank Indonesia must be ready to stabilize4 the rupiah in the market, MNC Securities head of research Edwin Sebayang said1 on Friday. An unstable rupiah might further negatively impact negative perceptions in the financial markets, which, if multiplied, could lead to a potential crisis, analysts said1. BI deputy governor Hartadi Sarwono has said2 that the central bank is always diligently active in the currency markets to directly intervene in rupiah valuations by purchasing or selling foreign exchange. The central bank presently has more than US$124 billion in reserves to stabilize the rupiah. International funds sold1 Rp 3.6 trillion worth of publicly traded stocks at the Indonesia Stock Exchange (IDX), more than they bought1 this week, while foreign holdings of Indonesian government bonds slid about Rp 5.3 trillion. Valbury Asia Securities research and analysis vice president Nico Omer Jonckheere considered1 the sell-off a normal situation as foreigners took profits because Indonesian financial assets have been among the best
performers in the world2.
Market players see big gains4 in Indonesia, so they want to cash them in. Overall, were seeing3 risk-off trade. The weakening rupiah indicates corrections in stock and bond markets, he told1 The Jakarta Post.
The Jakarta Composite Index (JCI) jumped1 1.61 percent on Friday to
3,835.18 as global stock markets traded in the green zone after European countries pledged1 to secure their economies. The JCI has gained2 3.56 percent so far this year, ahead of Thailands 0.06 percent increase. Most major indexes across the world have suffered2 losses so far this year, with Singapore losing 12.57 percent, Japan 13.34 percent, Hong Kong 15.54 percent, United States 1.25 percent and United Kingdom 8.63 percent. Global economic uncertainties have resulted2 in high volatility in financial markets worldwide, becoming worse since last month, wiping out trillions of investors funds and scrapping gains nearly everywhere a phenomenon that is feared4 to affect the real sector and result in economic crisis. Edwin of MNC Securities said1 while European problems have eased2 for now, Indonesian policy makers moves and statements might spur negative sentiments in the countrys financial market, as they signaled downside economic growth risks. Now the problems are purely domestic. Europes problems have been temporarily resolved2 as Germany has committed2 to helping Greece, he added1. Government and central bank officials have expressed2 possibilities of a slowdown in Indonesias economy as global economic uncertainties could slow global trade and lower commodity prices. To spur growth, the government will plan on fiscal stimulus while BI is ready to loosen monetary policies, including cutting the benchmark interest rate.
