Rupiah Drops Most in a Week, Bonds Fall on Trade-Deficit Concern

Indonesia’s rupiah declined by the most in a week and government bonds fell on concern the trade balance was in deficit last month, which may cause the current- account shortfall to widen further.

The trade gap reached $1.5 billion in October, the largest since at least 2008, while the central bank forecasts the current-account deficit will be 2.3 percent of gross domestic product this quarter, the biggest since Bloomberg began compiling the data in 2003. The trade data are due Jan. 2.

“Downward pressure on the rupiah is still strong,” said Nurul Eti Nurbaeti, the Jakarta-based head of treasury research at PT Bank Negara Indonesia. “Considering the large demand for dollars from importers, the upcoming trade balance is likely to remain in deficit.”

The rupiah dropped 0.6 percent to 9,715 per dollar as of 9:24 a.m. in Jakarta, the biggest loss since Dec. 17, prices from local banks compiled by Bloomberg show. It weakened 6.7 percent this year, the second-worst performance among Asia’s 11 most-traded currencies after the Japanese yen.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, was unchanged at 5.7 percent today, down from 13.2 percent at the end of 2011.

Global investors sold $42 million more Indonesian stocks than they bought this month through Dec. 21, after taking out $319 million in November, exchange data show.

The yield on the government’s 10 percent bonds due July 2017 climbed five basis points, or 0.05 percentage point, to 4.85 percent, the biggest increase since Sept. 26, prices from the Inter Dealer Market Association show. The yield dropped 58 basis points this year and touched a record low of 4.47 percent on Feb. 9.

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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