Rupiah Forwards Strengthen Most in a Week on Faster China Growth

Indonesia’s rupiah forwards rose the most in a week on optimism an eight-month slide in exports will end as economic growth rebounds in China, the biggest buyer of the Southeast Asian nation’s goods.

The world’s second-largest economy expanded 7.9 percent last quarter from a year earlier, up from 7.4 percent in the previous period, the government reported today. That was more than the 7.8 percent median estimate of analysts in a Bloomberg survey. Indonesia’s overseas sales contracted 4.6 percent in November from a year earlier, resulting in a second consecutive trade deficit, according to official data.

“Better economic growth in China adds to positive sentiment for Asian currencies including the rupiah,” said Fahrudin Haris Prastowo, a foreign-exchange trader at PT Bank Rakyat Indonesia in Jakarta. “Indonesia’s exports may begin to pick up as demand rises in the region.”

One-month non-deliverable forwards rose 0.5 percent to 9,845 per dollar as of 3:24 p.m. in Jakarta, the biggest gain since Jan. 11, data compiled by Bloomberg show. That’s 2.1 percent weaker than the spot rate, which advanced 0.2 percent to 9,635, prices from local banks compiled by Bloomberg show.

A daily fixing used to settle the derivative contracts was set at 9,850 today by the Association of Banks in Singapore. One-month offshore forwards gained 0.7 percent this week, while the spot rate is steady.

The currency’s one-month implied volatility, a measure of expected moves in the exchange rate used to price options, was unchanged at 6.75 percent, a level last reached in September.

The yield on the government’s 5.25 percent bonds due May 2018 dropped two basis points, or 0.02 percentage point, to 4.71 percent, the least since Jan. 15, according to prices from the Inter Dealer Market Association.

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