Rupiah Falls to Six-Week Low on Current-Account Deficit Concern

Indonesia’s rupiah declined to a six-week low and government bonds fell on concern the nation’s current-account deficit will widen.

The shortfall in the broadest measure of trade probably exceeded 2 percent of gross domestic product last quarter, compared with 1.98 percent in the previous three months, central bank Governor Agus Martowardojo said on Bloomberg TV Indonesia last week. The local currency also declined on speculation dividend payments to foreign investors by domestic companies will increase fund outflows from the country.

“The market is repricing the current-account deficit,” said Muhammad Ikhsan, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta. “Dividend repatriation is set to increase in the second quarter and concern that this will further widen the current-account gap weighs on the rupiah.”

The rupiah fell 0.7 percent to close at 11,520 per dollar, after touching 11,535, the lowest level since March 6, prices from local banks show. In the offshore market, one-month non-deliverable forwards declined 0.9 percent to 11,590 per dollar, trading 0.6 percent weaker than the onshore spot rate, data compiled by Bloomberg show.

Bank Indonesia placed a fixing used to settle the forwards at 11,486 per dollar today, from 11,430 yesterday. One-month implied volatility, a measure of expected swings in the currency used to price options, slid 32 basis points to 10.69 percent.

The nation’s trade surplus probably narrowed to about $500 million in March, from $785.3 million in February, Perry Warjiyo, deputy governor at the central bank, said yesterday.

The government’s 8.375 percent bonds due March 2024 fell for a seventh straight day, the longest losing streak since November. The yield climbed 12 basis points, or 0.12 percentage point, today to 8.07 percent, the highest level since March 27, according to the Inter Dealer Market Association.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE