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Rupiah Forwards Drop as Current-Account Gap Widens; Bonds Steady

Indonesia’s three-month rupiah forwards fell the most in more than a week after a central bank report showed the nation’s current-account deficit widened. Bonds were little changed.

The shortfall in the broadest measure of trade increased to $7.8 billion last quarter, compared with the $7.4 billion median estimate in a Bloomberg News survey and $5.3 billion in the preceding three months, according to figures published yesterday. The local currency weakened 6.3 percent in the past year as imports of oil, sold locally at subsidized prices, contributed to the worsening gap.

“It’s the current-account segment that’s really weighing on the rupiah’s prospects,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. “There’s no near-term reason for the rupiah to significantly strengthen against the U.S. dollar.”

Three-month non-deliverable forwards weakened 0.4 percent to 9,726 per dollar as of 3:10 p.m. in Jakarta, data compiled by Bloomberg show. The contracts traded at a 0.7 percent discount to the spot rate, which fell 0.1 percent to 9,660, according to prices from local banks compiled by Bloomberg.

A daily fixing used to settle the derivative contracts was set at 9,666 per dollar today by the Association of Banks in Singapore. That’s 0.2 percent lower than 9,643 yesterday.

The rupiah’s one-month implied volatility, which measures expected exchange-rate swings used to price options, was unchanged at 6.5 percent for a ninth day.

Indonesia will have to address the uncertainty over oil subsidies, which will stoke concern over its growth outlook and currency, Benedict Bingham, the International Monetary Fund’s senior resident representative, said on Jan. 31 in Jakarta.

The yield on Indonesia’s 5.625 percent bonds due May 2023 was little changed at 5.25 percent, prices from the Inter Dealer Market Association show.

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