Rupiah Forwards Drop for Third Day on Current-Account Concern

Indonesia’s rupiah forwards fell for a third day after the nation’s current-account deficit widened to a record last quarter. Government bonds were steady.

Contracts to buy the currency in a month touched a one-week low today after the central bank said Feb. 13 the shortfall was $7.8 billion in the three months through December, the most since Bloomberg began compiling the data in 1989. The full-year deficit may be 2.5 percent to 2.6 percent of gross domestic product in 2013, compared with 2.7 percent in 2012, Bank Indonesia Deputy Governor Hartadi Sarwono said Feb. 15.

“The current account has been a concern but I expect it to improve from here,” said Billie Fuliangsahar, the head of treasury at PT Rabobank International Indonesia in Jakarta. “The rupiah is trading near its fair value considering its fundamentals, and it has limited room to strengthen.”

One-month non-deliverable forwards for the rupiah fell 0.2 percent to 9,702 per dollar as of 3:20 p.m. in Jakarta, the weakest level since Feb. 8, according to data compiled by Bloomberg. The contracts traded at a 0.2 percent discount to the spot rate, which declined 0.1 percent to 9,682, prices from local banks compiled by Bloomberg show. Non-deliverable forwards are settled in dollars.

A daily fixing used to settle the derivative contracts was set at 9,676 today by the Association of Banks in Singapore, compared with 9,681 on Feb. 15.

The rupiah’s one-month implied volatility, which measures expected moves in exchange rates used to price options, was unchanged at 6.5 percent for an 11th day.

Overseas investors have added 3.3 trillion rupiah ($341 million) to their sovereign debt holdings this month through Feb. 14, more than in any entire month since November, finance ministry data show.

The yield on Indonesia’s 5.625 percent bonds due May 2023 was little changed at 5.26 percent, the lowest level since Feb. 13, prices from the Inter Dealer Market Association show.

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