Rupiah Weakens Most Since September on Month-End Dollar Demand

Indonesia’s rupiah fell by the most in a month on speculation companies stepped up dollar purchases to meet month-end payments. Government bonds declined.

The currency weakened 0.6 percent, the biggest drop since Sept. 27, to 11,175 per dollar as of 4:06 p.m. in Jakarta, prices from local banks show. In the offshore market, one-month non-deliverable forwards were unchanged at 10,918, trading 2.4 percent stronger than the onshore spot rate, according to data compiled by Bloomberg.

The government will report on Nov. 1 that the nation’s trade surplus narrowed to $63 million in September from $132 million in August, according to the median estimate in a Bloomberg survey. Overseas shipments fell for the 18th straight month, a separate survey showed before data due the same day.

“At the end of the month, you typically see increased dollar demand, so we will see that reflected until the end of this week,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The trade data may show a small positive, but it won’t be too significant as exports are likely still weak.”

One-month implied volatility in the rupiah, a measure of expected moves in the exchange rate used to price options, slid 15 basis points to 12.30 percent. A fixing used to settle the forwards was set at 10,862 per dollar, from 10,825 yesterday, according to the Association of Banks in Singapore.

The yield on the 5.625 percent notes due May 2023 climbed 15 basis points, or 0.15 percentage point, to 7.26 percent, the highest level since Oct. 22, prices from the Inter Dealer Market Association show.

Indonesia plans to sell dollar-denominated bonds and Islamic debt next year, Robert Pakpahan, director general at the debt management office, said in an interview in Jakarta today. The government is “seriously” considering selling yen-denominated notes without a guarantee from the Japan Bank for International Cooperation for the first time in 2014, while also studying a debut Eurobond issuance, he said.

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