Indonesia’s rupiah climbed the most in more than three years and bonds gained after the central bank said it will offer to take foreign-currency term deposits from lenders to boost the supply of dollars.
Bank Indonesia will accept seven-, 14-day and one-month deposits at weekly auctions, allowing local lenders to bring back about $2 billion per day from offshore banks, Deputy Governor Halim Alamsyah said yesterday. The rupiah has slumped 2.7 percent in May after global funds cut holdings of local stocks by $720 million, exchange data show.
The central bank’s “measure would help in mitigating the de-risking in the region,” said Philip Wee, a Singapore-based senior currency economist at DBS Group Holdings Ltd. “The rupiah’s trend is part of a broader risk aversion.”
The rupiah surged 1.9 percent, the most since April 2009, to 9,435 per dollar as of 4:34 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency closed at 9,616 yesterday, the weakest level since November 2009.
One-month implied volatility, which measures exchange-rate swings used to price options, rose 50 basis points, or 0.5 percentage point, to 17.5 percent.
“Bank Indonesia’s initiative to offer dollar deposits is structurally positive but may do little to address the structural dislocation in the onshore market,” analysts at Oversea-Chinese Banking Corp. led by Selena Ling wrote in a report today.
The yield on the government’s 7 percent bonds due May 2022 dropped three basis points, or 0.03 percentage point, to 6.52 percent, according to data compiled by Bloomberg. The notes are headed for the biggest monthly since in November after yields rose 58 basis points in May.