Rupiah Forwards Advance by Most in Three Weeks on Fed Remarks

Indonesia’s rupiah forwards rose by the most in three weeks and bonds gained after a Federal Reserve official signaled monetary stimulus that’s fueled demand for emerging-market assets will likely be maintained.

Fed Bank of New York President William Dudley said yesterday that U.S. growth isn’t strong enough to spur the improvement needed in jobs. The Federal Open Market Committee releases minutes of its Oct. 29-30 meeting tomorrow, which may give investors a clearer picture of when policy makers will start trimming the $85 billion of monthly bond purchases. An improvement in Indonesia’s current-account deficit failed to avert a slide in the rupiah as it heads for a monthly loss.

“The dollar weakened on dovish remarks from the Fed, which relieves some pressure on the rupiah, but it’s all still very uncertain,” said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. “The rupiah will remain under some depreciating pressure as the current-account deficit’s narrowing is quite minimal.”

Rupiah one-month non-deliverable forwards surged 1 percent to 11,360 per dollar as of 4:04 p.m. in Jakarta, the most since Oct. 25, data compiled by Bloomberg show. The contracts traded 2.1 percent stronger than the spot rate, which gained 0.3 percent to 11,598 per dollar, prices from local banks show.

Bond Auction

The Finance Ministry raised 12 trillion rupiah ($1 billion) from sales of bonds due in one through 15 years today, exceeding the 8 trillion rupiah goal, Robert Pakpahan, director general at the debt management office, said in a mobile-phone text message. Investors submitted bids for 2.8 times the amount offered, he said.

The yield on Indonesia’s 5.625 percent government bonds maturing in May 2023 dropped four basis points, or 0.04 percentage point, to 8.38 percent, lowest level since Nov. 11, prices from the Inter Dealer Market Association show.

Overseas investors bought $25 million more Indonesian stocks than they sold yesterday, the first net inflow since Oct. 31, according to exchange data. The current-account shortfall narrowed to 3.8 percent of gross domestic product last quarter, from a record 4.4 percent in the previous period, an official report showed on Nov. 13.

A daily fixing used to settle the rupiah forwards was set at 11,349 per dollar, from 11,427 yesterday by the Association of Banks in Singapore. One-month implied volatility in the rupiah, a measure of expected moves in the exchange rate used to price options, fell two basis points to 14.34 percent.

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