"Within a week, the rupiah plummeted to its lowest level in the past two years, after global investors reduced their asset holdings in Indonesia due to worries that the European debt crisis would curb expors," an analyst with Monex Investindo Futures Johanes Ginting said here on Monday.
The inter-bank exchange rate of the Rupiah declined on Monday from Rp8,760 against the greenback to Rp8,840.
Johanes said international financial institutions had sold more than US$414 million worth of Indonesian shares early this week.
He said the rupiah dropped by up to 2.6 percent last week prompting Bank Indonesia to intervene in the money and bond markets.
"The possibility of a default and Greece`s exit from the Euro zone has triggered risk prevention actions. The market has been worried by global economic slowdown and the rupiah has been affected by the market development," he said.
He said traders had gone to save haven currencies for investment hedging such as the US and the Japanese Yen as shown by increasing value of the two currencies.
Analyst from Asset Management, Reza Priyambada, said the debt problems in the European region had made short-term market traders to take a profit-taking position.
"The weakening of the rupiah is caused by market traders who are worried about the crisis in Europe," he said.
He said market traders especial foreign ones still continued cutting their assets holding.
He said however it was indicated that long-term investors were still in the country. The central bank`s intervention has been able to return market confidence.
The middle-rate of the rupiah at Bank Indonesia on Monday was recorded down to Rp8,805 against the US dollar from Rp8,772 in the previous day.
The composite index of the Indonesia Stock Exchange meanwhile was closed down 2.09 percent or 80.13 points to 3,755.05 on Monday.
The index of the LQ45 of bluechips also dropped 2.36 percent or 15.76 points to 654.34.
(SYS/H-YH/A014)
Editor: Suryanto
Copyright © ANTARA 2011
