Rupiah Touches Three-Year Low on Concern About Trade Deficit

Indonesia’s rupiah fell, touching a three-year low, as official data showed the nation’s trade balance remained in deficit for a second month in November.

The trade shortfall narrowed to $478 million, official data show, from a revised $1.9 billion gap in October, the largest since Bloomberg began compiling the data in 2008. Credit Suisse Group AG predicts the current-account deficit reached a record 2.9 percent of gross domestic product in the fourth quarter of 2012, compared with the central bank’s 2.3 percent forecast on Dec. 11, which was the most in data going back to 1997, economist Robert Prior-Wandesforde wrote in a research note today.

The rupiah fell 0.5 percent to 9,688 per dollar as of 3:28 p.m. in Jakarta from Dec. 28, the biggest drop since Dec. 17, prices from local banks compiled by Bloomberg show. Local markets were closed on Dec. 31 and Jan. 1. It touched 9,785 earlier, the weakest level since Sept. 16, 2009. The rupiah was the worst-performing currency last year among Asia’s 10 most-active excluding the Japanese yen, declining 5.9 percent.

“The trade balance likely remained in deficit through December,” said Mika Martumpal, a currency analyst at PT Bank CIMB Niaga in Jakarta. “The rupiah will trade between 9,700 and 9,800 through the first quarter, after which commodity prices may rise and improve exports.”

One-month implied volatility for the rupiah, a measure of expected moves in exchange rates used to price options, was unchanged at 5.7 percent today. It fell 7.5 percentage points last year, the most since 2009.

Consumer prices gained 4.3 percent last month, the slowest pace since March, a separate report today showed. Global funds added 46.1 trillion rupiah ($4.8 billion) to their holdings of local-currency government bonds in the second half of 2012 through Dec. 26, finance ministry data show.

The yield on the government’s 7 percent notes maturing in May 2022 declined one basis point, or 0.01 percentage point, to 5.18 percent, prices from the Inter Dealer Market Association show. The yield fell 84 basis points, or 0.84 percentage point, in 2012, a fourth year of declines.

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