Rupiah Falls for Fifth Day as Trade Data Disappoints; Bonds Drop

Indonesia’s rupiah fell, poised for the worst week since August, as data today showed the nation’s trade balance unexpectedly swung back to a deficit in September. Government bonds declined.

The shortfall was $657 million, compared with a revised $72 million excess in August and the $96 million surplus estimated by economists in a Bloomberg survey. Exports slid 6.9 percent, declining for an 18th month. Consumer-price gains eased to 8.3 percent last month, from 8.4 percent in September, a separate report showed today. The rupiah plunged 14 percent in the third quarter as inflation surged to a four-year high.

“This shows the August surplus was temporary and that the trade deficit is probably going to be sustained in the coming months, while the current-account deficit will remain until mid-2014,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore. “The inflation number shows that the panic a few months ago was excessive.”

The rupiah slid 0.9 percent to 11,373 per dollar as of 9:59 a.m. in Jakarta, prices from local banks show. The currency has fallen every day this week to drop 3.1 percent from Oct. 25, the most since the five days ended Aug. 23. It gained 2.7 percent last month in the second-best performance among 24 emerging-market currencies tracked by Bloomberg, trailing only Malaysia’s ringgit.

Most Asian exchange rates declined today after data showing an improvement in U.S. business activity spurred speculation the Federal Reserve may start to taper stimulus that has buoyed emerging markets as soon as December.

Forwards, Bonds

In the offshore markets, one-month non-deliverable forwards fell 1.2 percent to 11,170 per dollar, according to data compiled by Bloomberg. They touched 11,183, the weakest level since Oct. 11, and were 1.8 percent stronger than the onshore spot rate. A fixing used to settle the contracts was set at 10,902 yesterday, from 10,862 on Oct. 30, according to the Association of Banks in Singapore.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 32 basis points, or 0.32 percentage point, to 13.09 percent.

The yield on the nation’s 5.625 percent bonds maturing in May 2023 advanced two basis points to 7.49 percent, the highest level since Oct. 17, prices from the Inter Dealer Market Association show. The yield rose 50 basis points this week.

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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