Rupiah Forwards, Bonds Advance After Surprise Trade Surplus

Indonesia’s rupiah forwards rose by the most in two weeks and government bonds rallied after the nation unexpectedly posted its first trade surplus in five months and inflation slowed.

The yield on the 10-year notes reached a two-week low after official data yesterday showed consumer prices increased 4.31 percent in September, compared with 4.58 percent the month before and the 4.6 percent median forecast in a Bloomberg survey. The trade balance was $249 million in August, better than the $62 million deficit predicted by analysts.

“Inflation and the deficit remain the biggest considerations for Indonesia, so the positive data reassured investors,” said Bayu Kurniawan, a Jakarta-based foreign-exchange trader at PT Bank Ekonomi Raharja, a unit of HSBC Holdings Plc. “The rupiah will tend to strengthen in the next few weeks.”

Twelve-month non-deliverable forwards rose 0.4 percent to 10,033 per dollar as of 3:56 p.m. in Jakarta, the most since Sept. 14, data compiled by Bloomberg show. The contracts, which are agreements to buy or sell assets at a set price and date, traded at a 4.5 percent discount to the spot rate. Non-deliverable forwards are settled in dollars.

The rupiah advanced 0.1 percent to 9,581 per dollar, prices from local banks compiled by Bloomberg show. One-month implied volatility, which measures exchange-rate swings used to price options, held at 6 percent.

Seasonal Skew

“We caution against reading too much into a single data point, which is likely to be skewed by seasonal effects,” analysts at DBS Group Holdings Ltd. led by David Carbon in Singapore, wrote in a report today. “Trade volumes usually drop sharply during the holiday month and rebound immediately after,” he wrote, referring to the Muslim fasting month of Ramadan from July 21 to Aug. 20.

The yield on the government’s 7 percent bonds due May 2022 dropped one basis point, 0.01 percentage point, to 5.91 percent, the lowest level since Sept. 19, prices from the Inter Dealer Market Association show. The finance ministry plans to raise 500 billion rupiah ($52 million) from a Shariah-compliant note auction today and 5 trillion rupiah from a non-Islamic debt sale on Oct. 4.

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