ASEAN KEY DESTINATIONS
Indo rupiah heads down
Indonesia's rupiah declined for a second week as the possibility of increasing inflation and no interest-rate increases puts off overseas investors.
Bank Indonesia left its policy rate unchanged for a 17th meeting on January 5, even after inflation in December accelerated at the fastest pace in 20 months. Foreign funds sold $368 million more stocks than they bought in the first four days of this week, according to exchange data. Offshore ownership of Indonesian government bonds fell to 197.02 trillion rupiah (21.7 billion) as of January 11, from 198.75 trillion on Jan. 7, according to finance ministry data.
"It's still the same issue; there's still lingering concerns about inflation," said Johanna Chua, the Hong Kong- based head of Asian economic research at Citigroup Inc. "There's been no statement coming out of the central bank. They are not hinting at the need to raise interest rates whereas we see other countries like Korea and Thailand raising rates."
The rupiah declined 0.4 percent this week to 9,068 per dollar.
Consumer prices in Southeast Asia's biggest economy rose 6.96 percent last month from a year earlier. Indonesia and the Philippines are the only two major economies in the region that use interest rates as the major tool to manage monetary policy, which didn't raise rates last year.
South Korea increased its benchmark interest rate by 25 basis points to 2.75 percent January Bank of Thailand raised its key rate to 2.25 percent from 2 percent January 12.
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