Indonesian currency drops as much as 3% to five-month low
Central bank says move is temporary as outflows are muted
Indonesia’s rupiah plunged the most in five years, prompting the nation’s central bank to say it stepped in to stabilize the market.
The rupiah sank 2.7 percent to 13,495 per dollar as of 9:47 a.m. in Jakarta, set for the biggest decline since September 2011, according to prices from local banks compiled by Bloomberg. It dropped as much as 3 percent to reach a five-month low of 13,545.
The currency weakened after a few short-term investors rushed to the non-deliverable forwards market to hedge, causing the contracts to drop significantly, Nanang Hendarsah, head of financial market deepening at Bank Indonesia, said by mobile phone text message. The monetary authority is already in the market to stabilize the rupiah, and doesn’t see much fund outflows and expects the move to be temporary, he said.
