Indonesian Bond Yields Drop Most Since January; Rupiah Advances
Indonesia’s bonds gained, pushing the 10-year yield lower by the most since January, and the rupiah advanced after data showed the trade gap unexpectedly narrowed in July to the least this year.
The local currency snapped a four-day decline after data showed the nation’s trade shortfall in July decreased to $177 million, the statistics bureau said today. That’s compared with the $1.5 billion estimated by economists in a Bloomberg survey and a revised $1.3 billion the previous month, which was the widest deficit in data going back to February 2008. Exports fell 7.3 percent from a year earlier, compared with a decline of 16 percent in June, the bureau said.
“There is positive sentiment in the market following the data as we saw many investors selling dollars,” said Taufan Tito, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta. “I still expect the trade deficit to widen, driven by growth concerns in Europe, China and the U.S.”
The rupiah strengthened 0.2 percent to 9,565 per dollar as of 5:09 p.m. in Jakarta, the most since Aug. 23, according to prices from local banks compiled by Bloomberg. It lost 0.6 percent last week and was Asia’s worst-performing currency in August. One-month implied volatility, which measures exchange- rate swings used to price options, was unchanged at 7.25 percent.
The yield on the government’s 7 percent bonds due May 2022 dropped 16 basis points, or 0.16 percentage point, to 6.12 percent, the biggest drop since Jan. 19, closing prices from the Inter Dealer Market Association show.
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