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Rupiah Falls Most in Three Weeks on Current-Account Gap Concern

Jan. 3 (Bloomberg) -- Indonesia’s rupiah fell by the most in almost three weeks as analysts forecast the current-account deficit will be bigger than the central bank forecast. Government bonds gained, pushing the 10-year yield to the lowest level since February.

The shortfall will be 2.9 percent of gross domestic product in the fourth quarter, Credit Suisse Group AG economist Robert Prior-Wandesforde wrote in a note yesterday. Barclays Plc forecast 2.5 percent, Singapore-based economist Prakriti Sofat said today. Bank Indonesia predicted a 2.3 percent gap on Dec. 11. November’s trade deficit was $478 million, after a revised $1.88 billion in October, data showed yesterday.

“I am pessimistic about the rupiah, its weakening will continue,” said Billie Fuliangsahar, the Jakarta-based treasury director at PT Rabobank International Indonesia. “The trade gap will remain until the middle of this year and continue to weigh on the current account and the rupiah.”

The rupiah weakened 0.3 percent to 9,675 per dollar as of 3:34 p.m. in Jakarta, the biggest decline since Dec. 17, prices from local banks compiled by Bloomberg show. The rupiah was the worst-performing currency last year among Asia’s 10 most-active excluding the Japanese yen, declining 5.9 percent.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, was steady at 5.7 percent today.

The yield on the government’s 5.625 percent bonds due May 2023 fell four basis points, or 0.04 percentage point, to 5.14 percent, according to prices from the Inter Dealer Market Association. That is the lowest level since Feb. 9, when the benchmark 10-year yield reached a record-low 5.05 percent.

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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