The rupiah weakened for a sixth month, its longest losing streak since 1998, on concern Europe's debt crisis will damp growth and exports.

Indonesia will probably post its third consecutive trade deficit of $530 million in June as overseas sales fell 7.9 percent, according to the median estimate of analysts surveyed by Bloomberg ahead of data due tomorrow.

The economy will expand 6.1 percent to 6.5 percent this year, compared with a previous estimate of 6.3 percent to 6.7 percent, the central bank said in a July 13 statement. The World Bank also cut its annual growth projection for Indonesia this month.

"The lowered forecasts are negative for the rupiah, even if they are just a domino effect from the slowdown seen in other countries," said Billie Fuliangsahar, the head of treasury at PT Rabobank International Indonesia in Jakarta. "The rupiah's gains will be limited next month as long as Europe continues to be a concern."

The rupiah dropped 0.4 percent in July to 9,465 per dollar as of 3:28 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency fell 0.1 percent today and 4.2 percent this year.

One-month implied volatility, which measures exchange-rate swings used to price options, dropped one percentage point this month to 7.5 percent. It fell 50 basis points, or 0.5 percentage point, today.

Global funds bought $357 million more local stocks than they sold in July through yesterday and added 10 trillion rupiah ($1.1 billion) to their government bond holdings this month through July 27, according to data from the exchange and finance ministry.

"There is still interest in Indonesia's assets, but the flows into stocks and bonds this month are mostly hot money, which is unstable," said Fuliangsahar.

The government's benchmark 7 percent bonds due May 2022 advanced this month by the most since January, with the yield declining 43 basis points to 5.72 percent, according to prices from the Inter Dealer Market Association. The yield dropped two basis points today.