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Rupiah Forwards Drop Most in Three Weeks on World Growth Concern

Indonesia’s rupiah forwards dropped by the most in three weeks after foreign funds sold the nation’s stocks on concern the global economy is slowing. Government bonds declined and the local currency advanced.

Overseas funds sold $9.7 million more local shares than they bought yesterday, the biggest outflow since Sept. 25, exchange data show. The International Monetary Fund said yesterday the world economy will expand 3.3 percent this year, the least since 2009, compared with its July forecast of 3.5 percent. Bank Indonesia’s foreign-exchange holdings rose for a third month to $110 billion in September, the most since May.

“Concern about global growth prompted investors to seek safety,” said Nurul Eti Nurbaeti, the head of treasury research at PT Bank Negara Indonesia in Jakarta. “The spot price will be more stable than the forwards, as Bank Indonesia has ample reserves and is committed to guarding the rupiah.”

Twelve-month non-deliverable forwards fell 0.7 percent to 10,134 per dollar as of 3:47 p.m. in Jakarta, the biggest drop since Sept. 18, according to data compiled by Bloomberg. The contracts to buy or sell the rupiah in one year traded at a 5.6 percent discount to the spot rate. Non-deliverable forwards are settled in dollars.

The rupiah strengthened 0.1 percent to 9,593 per dollar, prices from local banks compiled by Bloomberg show. It reached 9,635 earlier, the weakest level since May 31. One-month implied volatility, which measures exchange-rate swings used to price options, held at 6 percent.

Bank Indonesia will meet tomorrow to review its benchmark interest rate. All 23 analysts surveyed by Bloomberg expect it to be held for an eighth month at a record-low 5.75 percent.

The yield on the government’s 7 percent bonds maturing in May 2022 climbed one basis point, or 0.01 percentage point, to 5.90 percent, the highest level since Oct. 1, prices from the Inter Dealer Market Association show.

To contact the reporter on this story: Yudith Ho in Jakarta at yho35@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

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