Rupiah Forwards Decline on Spanish Debt Concerns; Bonds Advance
Indonesia’s rupiah forwards fell the most in a week as Spain’s announcement that it doesn’t plan to seek a bailout anytime soon fanned concern Europe’s debt crisis will worsen. Government bonds advanced.
The Bloomberg-JPMorgan Asia Dollar Index declined after Spanish Prime Minister Mariano Rajoy said he does not intend to request rescue funds imminently. The Asian Development Bank lowered its economic growth forecast for Indonesia to 6.3 percent this year, from an April estimate of 6.4 percent, Edimon Ginting, senior country economist, said today. The Finance Ministry plans to raise 5 trillion rupiah ($521 million) from a bond sale tomorrow.
“There is a tendency for the rupiah to weaken on the current risk-off sentiment,” said Klara Pramesti, a Jakarta- based research analyst in the treasury division at PT Bank Negara Indonesia. “Bonds will be relatively resilient ahead of the debt auction tomorrow, which will be oversubscribed.”
Twelve-month non-deliverable forwards weakened 0.2 percent to 10,061 per dollar as of 3:22 p.m. in Jakarta, the most since Sept. 26, data compiled by Bloomberg show. The contracts to buy or sell the local currency at a set price and date traded at a 4.6 percent discount to the spot rate. Non-deliverable forwards are settled in dollars.
The rupiah traded at 9,586 per dollar, compared with 9,587 yesterday, prices from local banks compiled by Bloomberg show. One-month implied volatility, which measures exchange-rate swings used to price options, held at 6 percent.
The yield on the government’s 7 percent bonds due May 2022 dropped one basis point, or 0.01 percentage point, to 5.89 percent, the lowest level since Sept. 17, prices from the Inter Dealer Market Association show.
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