Rupiah Rebounds From Three-Year Low on Intervention Speculation

Indonesia’s rupiah gained the most in two weeks, rebounding from a three-year low, on speculation the central bank intervened in the market to stabilize the currency.

Bank Indonesia will hold its benchmark rate at a record-low 5.75 percent for a 10th month tomorrow, according to all 18 economists surveyed by Bloomberg. The monetary authority continues to reduce the local currency’s volatility in line with its fundamentals, it said in a Nov. 8 statement on its website. Indonesia’s trade balance swung to a shortfall of $1.5 billion in October, indicating the current account will probably remain in deficit for a fifth straight quarter.

“The rupiah tends to approach new lows, but the central bank seeks to stabilize the exchange rate,” said Taufan Tito, a Jakarta-based foreign-exchange dealer at PT Bank Rakyat Indonesia. “Investors want the reference rate raised considering the current-account deficit but it will probably be steady this year.”

The rupiah strengthened 0.2 percent to 9,635 per dollar as of 3:28 p.m. in Jakarta, the biggest gain since Nov. 26, prices from local banks compiled by Bloomberg show. It reached 9,733 earlier, the weakest level since September 2009. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 13 basis points, or 0.13 percentage point, to 5.5 percent.

The yield on the government’s 7 percent bonds due in May 2022 climbed one basis point to 5.38 percent, 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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.