Rupiah Forwards Reverse Loss on Largest Trade Surplus Since 2011

Indonesia’s rupiah forwards reversed an earlier decline and government bond yields fell after the country reported slowing inflation and the largest monthly trade surplus since November 2011.

Exports increased in December by the most since October 2011, contributing to a $1.5 billion trade excess, more than the $729 million estimated by economists surveyed by Bloomberg, the statistics bureau said in Jakarta today. Consumer prices gained 8.22 percent last month from a year earlier, compared with 8.38 percent in December, a separate report showed.

“The data indicate that efforts to improve the deficit are working,” said Rully Nova, a foreign-exchange analyst at PT Bank Himpunan Saudara 1906 in Jakarta. “The December numbers are out of the ordinary and probably one-off, but we do expect the trade balance to keep improving on better global demand.”

Rupiah one-month non-deliverable forwards advanced 0.3 percent to 12,187 per dollar as of 11:59 a.m. in Jakarta, after declining as much as 0.4 percent earlier, data compiled by Bloomberg show. The offshore contracts traded 0.3 percent stronger than the onshore spot rate, which pared losses to drop 0.1 percent to 12,219 from Jan. 30, prices from local banks show. Local markets were closed on Jan. 31 for a public holiday.

The yield on the government’s 9.5 percent bonds due June 2015 declined five basis points, or 0.05 percentage point, from Jan. 30 to 7.56 percent, according to the Inter Dealer Market Association.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped eight basis points to 12.63 percent, according to data compiled by Bloomberg. A fixing used to settle the rupiah forwards was set at 12,153 per dollar today by the Association of Banks in Singapore, from 12,171 on Jan. 30.

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