The rupiah touched a four-year low on speculation the U.S. will pare stimulus at a time when Indonesia’s current-account deficit is worsening.
The Bloomberg U.S. Dollar Index climbed for a second day before a report that may show U.S. retail sales increased for a fourth month in July, while data on manufacturing and housing starts later in the week are also forecast to improve. Indonesia’s current-account shortfall may be a record $9 billion in the second quarter, from $5.3 billion in the previous three months, central bank Deputy Governor Perry Warjiyo said Aug. 2.
“There is increased concern that the Federal Reserve will go ahead with its tapering plans,” said Rully Nova, an analyst at PT Bank Himpunan Saudara 1906 in Jakarta. “The uncertainty will prompt more outflows from emerging-market currencies, especially the rupiah with its widening deficit.”
The rupiah declined as much as 0.1 percent to 10,298 per dollar, the weakest level since July 2009, before trading unchanged at 10,290 as of 3:03 p.m. in Jakarta, according to prices from local banks. The spot rate was at a 1.5 percent premium to the one-month non-deliverable forwards, which fell 0.2 percent to 10,441, data compiled by Bloomberg show.
A fixing by the Association of Banks in Singapore used to settle the derivative contracts was set at 10,308, compared with 10,288 yesterday. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 21 basis points, or 0.21 percentage point, to 11.16 percent, according to data compiled by Bloomberg.
The yield on government bonds due May 2023 climbed five basis points to 7.78 percent, the highest level since July 31, data from the Inter Dealer Market Association show.
Four Federal Reserve officials indicated greater willingness last week to begin tapering the central bank’s bond-buying program that’s driven demand for emerging-market assets. Chicago Fed President Charles Evans said last week he wouldn’t rule out a decision to start scaling back asset purchases at the Sept. 17-18 gathering of the Federal Open Market Committee.