Indonesia’s rupiah declined the most since April on concern a deteriorating trade balance will spur capital outflows from the nation’s financial markets.
Official data this week showed imports exceeded exports by $1.96 billion in April, the widest gap in nine months, stoking speculation the current-account shortfall will increase from last quarter’s 2.06 percent of gross domestic product. The gap reached a record 4.4 percent in the three months through June 2013, fueling $1.8 billion of stock outflows in the second half of last year. Ten-year U.S. Treasury yields climbed 11 basis points this week, set for the biggest jump since March.
“With U.S. yields starting to rise, concerns over countries with twin deficits may return,” said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Indonesia had a surprisingly large trade deficit, so that’s causing some investors who were long rupiah to exit their positions.”
The currency slid 0.9 percent to close at 11,890 per dollar, the largest drop since April 23, prices from local banks show. It has lost 1.8 percent this week and reached 11,893 earlier, the lowest level since Feb. 19. In the offshore market, one-month non-deliverable forwards declined 0.8 percent to 11,947, trading 0.5 percent weaker than the onshore spot rate, data compiled by Bloomberg show.
One-month implied volatility in the rupiah, a measure of expected swings in the exchange rate used to price options, climbed 18 basis points, or 0.18 percentage point, to 9.99 percent. Bank Indonesia set a fixing used to settle the rupiah forwards at 11,810 per dollar, compared with 11,806 yesterday.
The yield on the nation’s 8.375 percent notes due March 2024 was little changed at 8.02 percent, according to the Inter Dealer Market Association.