Indonesia’s rupiah rebounded from a four-year low after the central bank announced measures to boost foreign-currency supply. Government bonds fell.
The rupiah is still headed for its worst week since 2008 after the current-account deficit widened to a record last quarter. Global funds pulled $516 million from local stocks this week amid speculation the Federal Reserve will soon start tapering stimulus. Bank Indonesia will offer foreign-exchange deposits with tenors of as long as 12 months, compared with a maximum of 30 days currently, Governor Agus Martowardojo said in Jakarta today.
“Lengthening the tenors for the deposits means the central bank can hold on to its foreign-exchange reserves for a longer period,” said Fahrudin Haris Prastowo, a fixed-income trader at PT Bank Rakyat Indonesia in Jakarta. “This will help build up reserves and boost Bank Indonesia’s ammunition to guard the rupiah.”
The rupiah gained 0.3 percent to 10,785 per dollar as of 2:40 p.m. in Jakarta, after earlier reaching 10,840, the weakest level since April 2009, according to prices from local banks. The spot rate declined 3.7 percent this week, the biggest drop since the five days ended Nov. 21, 2008, and traded at a 5.2 percent premium to the one-month non-deliverable forwards, which fell 0.3 percent to 11,347, data compiled by Bloomberg show.
Goldman Sachs Group Inc. cut its three-month forecast for the rupiah to 12,000 per dollar from 10,000, according to a research note by analysts Mark Tan and Hui Ying Chan.
“Sentiment toward possible Fed tapering and the widening current-account deficit drove the rupiah’s weakness,” Aldian Taloputra, an economist at PT Mandiri Sekuritas, a unit of the nation’s largest lender, said in Jakarta.
A rupiah fixing used to settle the forwards set by the Association of Banks in Singapore was 10,964 today, from 10,437 on Aug. 16. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 6.54 percentage points this week, the most since September 2011, to 18.31 percent, data compiled by Bloomberg show. It fell 1.77 percentage points today.
Foreign reserves dropped for a third month to $92.7 billion in July, the least since October 2010. The government outlined an economic policy package today including relaxing mineral export rules, offering tax holidays and simplifying the investment-permit process. The nation is taking steps to stabilize the economy, Coordinating Minister for the Economy Hatta Rajasa said at the announcement.
Indonesia posted a $9.8 billion current-account shortfall in the second quarter, the largest in data going back to 1989, central bank data showed on Aug. 16. Inflation was 8.6 percent in July, the fastest since February 2009, official data show.
The yield on the nation’s bonds due May 2023 rose 22 basis points this week to 8.41 percent, prices from the Inter Dealer Market Association show. It reached 8.54 percent on Aug. 21, the highest level since March 2011, and was steady today.