Rupiah Weakens for Third Day, Bonds Decline on Current Account

Indonesia’s rupiah fell for a third day and bonds declined on concern the nation will post a record current-account deficit this year.

The government expects the shortfall to be at a “safe level” of below 3 percent of gross domestic product, Finance Minister Agus Martowardojo said last week. Barclays Plc forecast today the deficit to be at 2.5 percent of GDP this year, which would be the most since Bloomberg began collecting the data in 1998. The broadest measure of trade widened to a record shortfall of $6.9 billion in the second quarter, compared with a deficit of $3.2 billion in the previous three months.

“The fundamentals for the rupiah remain weak,” said Prakriti Sofat, an economist at Barclays Plc in Singapore. “The current account is weighing on investor sentiment.”

The rupiah weakened 0.1 percent to 9,558 per dollar as of 5:19 p.m. in Jakarta, prices from local banks compiled by Bloomberg show. The currency touched 9,588 earlier, the lowest level since Sept. 14. One-month implied volatility, which measures exchange-rate swings used to price options, held at 5 percent.

The yield on the government’s 7 percent securities due May 2022 climbed three basis points, or 0.03 percentage point, to 5.93 percent, the highest level since Sept. 12, according to closing prices from the Inter Dealer Market Association.

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