Rupiah Snaps Four-Day Slide, Bonds Decline as Inflation Quickens

Indonesia’s rupiah fell for the first time in a week and government bonds slid after data showed inflation accelerated to the fastest pace since May 2011.

Consumer prices gained 5.90 percent in March, compared with the 5.56 percent median estimate in a Bloomberg survey of 15 analysts and the central bank’s target of 3.5 percent to 5.5 percent for 2013, official data released today show. Overseas investors’ holdings of Indonesia’s domestic sovereign debt fell 560 billion rupiah ($57 million) in the first 27 days of March, set for the first monthly decline since August. Bank Indonesia will meet on April 11 to review monetary policy.

“The market’s attention is now on the central bank meeting and on whether it will raise rates in response,” said Raditya Ariwibowo, a Jakarta-based research analyst at PT Bank Negara Indonesia’s treasury division. “Inflation may still accelerate from this point on.”

The rupiah fell 0.3 percent from March 28 to 9,740 per dollar as of 4:30 p.m. in Jakarta, after advancing a similar amount last week, prices from local banks show. It traded at a 0.6 percent premium to the one-month non-deliverable forwards, which lost 0.3 percent to 9,800, data compiled by Bloomberg show. The spot rate declined for a seventh quarter in the three months through March, the longest losing streak since 1998. Local financial markets were closed March 29 for a holiday.

A daily fixing used to settle the derivatives was set at 9,738 today by the Association of Banks in Singapore, compared with 9,719 on March 28.

One-month implied volatility for the rupiah, a measure of expected moves in the exchange rate used to price options, rose 28 basis points, or 0.28 percentage point, to 6.01 percent.

A separate report today showed the trade gap widened to $327 million in February, from $75 million the previous month.

The yield on the government’s 5.25 percent bonds due May 2018 rose two basis points to 5.10 percent, prices from the Inter Dealer Market Association show.

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