Rupiah Forwards Decline Most Since September on Deficit Concern

Indonesia’s rupiah forwards fell by the most in two months on concern the country’s current-account and trade gaps aren’t narrowing fast enough to restore investor confidence. Government bonds gained for a third day.

The current-account shortfall will be $30 billion to $31 billion at the end of the year, compared with $24 billion in 2012, Finance Minister Chatib Basri said in Jakarta today. The rupiah has fallen 2.4 percent in the past two weeks. The currency’s recent decline is because of external factors and high demand toward the end of the month, Bank Indonesia Governor Agus Martowardojo told reporters in Jakarta today.

“The sentiment hasn’t really improved for the Indonesian rupiah,” said Enrico Tanuwidjaja, an economist at Nomura Holdings Inc. in Singapore. “It’s still pretty much the concern on the current account. Imports may have slowed and the export revenue may have hardly seen any meaningful pick-up.”

Rupiah one-month non-deliverable forwards slid 2.5 percent to 11,954 per dollar as of 4:26 p.m. in Jakarta, the biggest drop since Sept. 20, data compiled by Bloomberg show. The offshore contracts traded 0.6 percent weaker than the onshore spot rate, which fell 1 percent to 11,885 per dollar, prices from local banks show. The currency reached 11,893 earlier, the lowest level since March 20, 2009.

The nation recorded a current-account deficit of $8.4 billion in the third quarter, compared with a record $9.9 billion shortfall in the previous three months, the central bank reported Nov. 13. The trade balance was in deficit for five of the six months through September.

Debt Sales

An exchange rate at about the 11,500 per dollar level will support exports and help address the deficit in the broadest measure of trade, Bank Indonesia Senior Deputy Governor Mirza Adityaswara said in Jakarta yesterday.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 45 basis points, or 0.45 percentage point, to 14.79 percent.

Indonesia will raise 19 percent of its 362 trillion rupiah ($30 billion) gross debt sales target next year by selling bonds denominated in dollars, euro or yen, Robert Pakpahan, director general at the debt management office, said in Jakarta today. The government will “frontload” issuance in the first half of 2014, he said.

The yield on the nation’s 5.625 percent rupiah bonds due May 2023 dropped three basis points to 8.56 percent, prices from the Inter Dealer Market Association show.

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; 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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