Indonesia’s rupiah dropped to the weakest level since September 2009 while bonds and stocks fell after a U.S. jobs report bolstered the case for the Federal Reserve to cut stimulus that has boosted the supply of dollars.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. brought forward their forecasts for the start of Fed tapering to September from December, after official data on July 5 showed U.S. payrolls increased by 195,000 workers in June, exceeding the 165,000 median forecast in a Bloomberg survey. Indonesia’s foreign-currency reserves fell to $98.1 billion last month, the lowest since January 2011, from $105.1 billion in May, according to a central bank report released late on July 5.
“The jobs data increased concern over Fed tapering, but nothing is certain as unemployment is still high,” said Dini Anggraeni, a fixed-income analyst at PT Mandiri Sekuritas in Jakarta. “The forex reserves are a concern, as it reduces the scope for the central bank to defend the currency.”
The rupiah declined 0.1 percent to 9,955 per dollar as of 4:16 p.m. in Jakarta, after reaching 9,964 earlier, according to prices from local banks. It traded at a 3.3 percent premium to one-month non-deliverable forwards, which advanced 0.2 percent to 10,285, data compiled by Bloomberg show.
One-month implied volatility for the rupiah, a measure of expected moves in the exchange rate used to price options, rose 1.38 percentage points to 13.71 percent, data compiled by Bloomberg show.
Fed Chairman Ben S. Bernanke said last month that $85 billion a month of debt buying may be tapered this year and ended in 2014. He said he expects the U.S. jobless rate to be about 7 percent when the Fed halts its stimulus, compared with 7.6 percent in June.
The yield on the 5.625 percent Indonesian bonds due May 2023 surged 45 basis points, or 0.45 percentage point, to 7.84 percent, the biggest increase since Jan. 20, 2011, according to prices from the Inter Dealer Market Association. It reached 7.87 percent earlier, the highest level since April 2011.
The Jakarta Composite Index of shares fell 3.7 percent, the biggest decliner among emerging Asian markets, as speculation Bank Indonesia will raise interest rates hurt banking and property stocks.
The central bank will raise its reference rate to 6.25 percent from 6 percent on July 11, which would be the second increase in a row, according to nine of 13 analysts surveyed by Bloomberg. Two expect a 50 basis point increase, while two forecast no change.
PT Bank Mandiri, the nation’s largest lender by assets, slid 7.4 percent, biggest drag on the Jakarta index.