Rupiah slips most in eight months

Bloomberg

The rupiah slid the most in eight months, leading losses among Asia’s emerging-market currencies, amid rising concern global growth is slowing. Indonesia’s central bank said it intervened to limit a sell-off in the currency and local bonds.
The rupiah tumbled as much as 1.4 percent, the biggest intraday drop since June, to hit a two-month low of 14,335 per dollar. Yields on Indonesia’s 10-year bonds climbed seven basis points to 7.96 percent.
Emerging-market assets fell across the board in Asian trading after the European Central Bank cut growth forecasts, and China’s export data was worse than economists estimated.
The risk-off sentiment is bolstering the dollar and pushing down the rupiah, Bank Indonesia said.
“A synchronised decline for the Asian markets is expected into the end of the week, underpinned by the gathering of growth concerns seemingly manifesting across all regions,” said Jingyi Pan, market strategist at IG Asia Pte in Singapore.
Mounting global worries have punished emerging-market assets in recent weeks, seemingly drawing an end to a rally that started in December amid signs the Federal Reserve was turning dovish. Optimism is turning to caution as central banks from Europe to Australia follow the Fed’s tilt, fueling fresh jitters about the outlook for growth.
The rupiah’s decline is also “a bit of unwinding of a carry trade that’s happening right now across EM high yielders as a result of the risk-off situation,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “It’s more of a broad risk-off situation, moving on from what happened overnight, in terms of how the market interpreted the ECB move.”
Bank Indonesia will remain in the market to stabilize the rupiah, Governor Perry Warjiyo said. The central bank will buy a “large amount” of government bonds, said Nanang Hendarsah, executive director for monetary management.