Indonesia’s rupiah weakened to the lowest level since April 2009 on speculation local companies increased dollar purchases after the currency had its best week since November 2012. Government bonds fell.
The rupiah advanced 0.5 percent last week as the Federal Reserve refrained from reducing the stimulus that has spurred demand for emerging-market assets. Indonesia’s trade shortfall surged to a record $2.3 billion in July, weighing on the current account that remained in deficit for a seventh quarter through June. Official August trade data will be released on Oct. 1.
“Corporates and importers are taking advantage of the rupiah’s rally last week to fulfill their dollar demand,” said Mika Martumpal, head of treasury research and strategy at PT Bank CIMB Niaga in Jakarta. “The rupiah will trade in a range and remain under pressure until we see more data in October.”
The currency dropped 0.4 percent to 11,488 per dollar as of 3:50 p.m. in Jakarta, after reaching 11,586 earlier, the weakest level since April 2, 2009, prices from local banks show. In the offshore market, one-month non-deliverable forwards fell 0.5 percent to 11,360. The contracts were 1.1 percent stronger than the spot rate, after trading on average 1.9 percent weaker in the past month.
One-month implied volatility in the rupiah, a measure of expected moves in the exchange rate used to price options, rose 54 basis points, or 0.54 percentage point, to 17.31 percent, data compiled by Bloomberg show. A fixing used to settle the forwards was set at 11,171 per dollar today, from 11,136 yesterday, according to the Association of Banks in Singapore.
The government raised 12 trillion rupiah ($1 billion) from a local-currency debt auction today, exceeding the 8 trillion rupiah goal, according to Robert Pakpahan, director general at the debt management office. Some 73.7 percent of this year’s net issuance target has now been achieved, he said.
The yield on the nation’s 5.625 percent bonds due May 2023 rose two basis points to 7.94 percent, according to prices from the Inter Dealer Market Association. It has dropped 48 basis points in September, poised for the biggest decline since January 2012. The bond rally this month will likely ease in October and November, according to Handy Yunianto, head of fixed-income research at PT Mandiri Sekuritas in Jakarta.