Rupiah in Longest Losing Streak Since August on Fed Taper Bets

Indonesia’s rupiah fell for a seventh day, the longest losing streak since August, and bonds dropped as U.S. economic data that topped estimates spurred bets the Federal Reserve will bring forward a planned stimulus cut.

Services growth in the world’s largest economy unexpectedly accelerated last month, beating forecasts for a slowdown, a report showed yesterday. Indonesia’s gross domestic product probably expanded 5.6 percent last quarter from a year earlier, compared with 5.8 percent in the three months through June, according to the median estimate in a Bloomberg survey before data due at 11 a.m. in Jakarta today. The nation recorded trade deficits in seven of the first nine months this year.

“The rupiah is more exposed to the rising Fed tapering concern because of the weak external balance,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “There will be an upside risk for the currency if the GDP data proves more robust, as weaker growth has been priced in.”

The rupiah declined 0.6 percent from Nov. 4 to 11,420 per dollar as of 9:41 a.m. in Jakarta, prices from local banks show. It reached 11,430 earlier, the weakest level since Oct. 11. Local markets were shut yesterday for a holiday. One-month non-deliverable forwards slid 0.8 percent to 11,360 per dollar, trading 0.5 percent stronger than the onshore spot rate, data compiled by Bloomberg show.

A daily fixing used to settle the contracts was set at 11,138 per dollar on Nov. 4, 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, rose 19 basis points, or 0.19 percentage point, to 13.88 percent.

The yield on the nation’s 5.25 percent bonds due May 2018 climbed eight basis points to 7.39 percent, the highest level since Oct. 11, prices from the Inter Dealer Market Association show. The government plans to raise 8 trillion rupiah ($701 million) from a bond auction today.

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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