Indonesia’s rupiah declined the most in more than a week as overseas investors pulled money out of the nation’s bonds before data forecast to show faster inflation and a wider trade deficit.
Global holdings of local sovereign debt fell 560 billion rupiah ($58 million) last month through March 27, heading for the first decline since August. Consumer prices probably gained 5.56 percent last month, the most since May 2011, after a 5.31 percent increase in February, according to the median estimate of 15 analysts in a Bloomberg survey. Local financial markets were closed March 29 for a holiday.
“The sell-off in bonds is probably because of fears of higher inflation,” said Enrico Tanuwidjaja, an economist at Royal Bank of Scotland Group Plc in Singapore. “The trade deficit will likely be persistent this year without significant measures to curb fuel imports, which will weigh on the rupiah.”
The rupiah dropped 0.2 percent from March 28 to 9,738 per dollar as of 10 a.m. in Jakarta, the biggest decline since March 20, prices from local banks show. It traded at a 0.6 percent premium to the one-month non-deliverable forwards, which lost 0.2 percent to 9,792, data compiled by Bloomberg show. The spot rate declined for a seventh quarter in the three months through March, the longest losing streak since 1998.
A daily fixing used to settle the derivatives was set at 9,719 on March 28 by the Association of Banks in Singapore, compared with 9,730 the previous day. Today’s rate will be released at 11:30 a.m. in the city-state.
One-month implied volatility for the rupiah, a measure of expected moves in the exchange rate used to price options, rose one basis point, or 0.01 percentage point, to 5.74 percent.
Official figures may show today that the trade gap widened to $206 million in February from $171 million in January, according to a Bloomberg survey.
The yield on the 5.625 percent bonds due May 2023 dropped one basis point to 5.56 percent, prices from the Inter Dealer Market Association show.
To contact the reporter on this story: Yudith Ho in Jakarta at firstname.lastname@example.org