Indonesian Rupiah to Drop 6 Percent by End-June, OCBC Predicts

By James Regan

March 31 (Bloomberg) -- Indonesia’s rupiah is likely to slide 6 percent to 12,500 per dollar in the coming quarter as overseas investors shun riskier assets and foreign exchange is needed to meet payments on imports and debt, according to Oversea-Chinese Banking Corp.

“We continue to project the rupiah to still be trading on a slightly weaker bias against the U.S. dollar,” Enrico Tanuwidjaja, an economist at OCBC in Singapore, wrote yesterday in a research note. “Sustained corporate dollar demand should guard any excessive plunge in the USD-IDR past the 11,000 mark in the very near term.”

The currency is likely to weaken to 13,000 per dollar in the third quarter before rebounding to 12,500 in the final three months of the year, Tanuwidjaja wrote.

The rupiah was recently 1.7 percent weaker at 11,750 in Jakarta, paring this month’s gain to 3.7 percent. The currency has dropped 5.7 percent so far this year and reached 12,300 on Feb. 18, the weakest since Dec. 3.