JAKARTA, Sept 18 — Indonesia’s rupiah was set to decline for the 10^th week, its longest losing streak since 2000, as foreigners sold stocks amid uncertainty about the timing of the first US interest-rate increase in almost a decade.

The Federal Reserve refrained from raising borrowing costs yesterday, prolonging a quandary that Bank Indonesia sees pressuring the currency.

While Fed chair Janet Yellen said most policy makers still expect to raise rates this year, she tied the decision to delay liftoff to fresh uncertainty about the global outlook and to financial market turbulence over the past month.

Foreign funds have pulled US$84 million (RM355.286 million) from Indonesian shares this week, taking outflows this quarter to US$991 million.

“Indonesia must keep holding its breath, which is a negative for the rupiah,” said I Made Adi Saputra, a fixed- income analyst at PT BNI Securities in Jakarta.

“Bank Indonesia won’t dare to cut rates to support economic growth before the Fed begins raising, so everything will be on pause.”

The rupiah declined 1 per cent this week to 14,470 a dollar as of 10:22 a.m. in Jakarta, prices from local banks show. It reached 14,480 yesterday, the weakest level since July 1998, and fell 0.1 per cent today.

The central bank is planning new money-market instruments to stabilize the rupiah and keep its volatility below 10 per cent, spokesman Tirta Segara said yesterday. The currency’s one-month historical volatility dropped by 81 basis points this week to 6.74 per cent.

Government bonds due September 2026 were set to drop for a third week, pushing the yield up by seven basis points to 9.34 per cent, Inter Dealer Market Association prices show. The yield reached 9.54 per cent yesterday, the highest since March 2010.

Morgan Stanley Investment Management sees “real value” in the nation’s bonds the current yield levels, Jens Nystedt, the New York-based managing director, said in an interview Wednesday. — Bloomberg