Indonesia’s Rupiah Jumps Most in a Month After Deficit Narrows

Indonesia’s rupiah jumped the most in a month after a report showed the current-account deficit almost halved last quarter and the central bank left borrowing costs unchanged.

The currency rose 0.9 percent to 11,976 per dollar as of 4:13 p.m. in Jakarta, the biggest gain since Jan. 13, according to prices from local banks. It traded stronger than the 12,000 level for the first time since Dec. 12. The rupiah has gained 1.6 percent this year, the most among 24 emerging-market currencies tracked by Bloomberg. It plunged 21 percent in 2013.

The shortfall in the broadest measure of trade was 1.98 percent of gross domestic product in the fourth quarter, the central bank reported today as it held the benchmark interest rate at 7.5 percent. That compared with Goldman Sachs Group Inc.’s forecast of 2.7 percent and 3.8 percent in the preceding three months.

“The current account issue of last year now appears to be solved as it has narrowed to a sustainable level,” said Nurul Eti Nurbaeti, head of treasury research at PT Bank Negara Indonesia. “With positive data from the domestic side and provided external factors remain conducive, we can see the rupiah continuing its rally this quarter.”

The rupiah’s one-month non-deliverable forwards rose 0.5 percent to 11,925 per dollar. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 25 basis points, or 0.25 percentage point, to 11.55 percent.

“Today’s data would go a long way in Indonesia’s rehabilitation process,” Wellian Wiranto, a Singapore-based economist at Oversea-Chinese Banking Corp. said in an e-mail. “It looks like the sizable improvement in the current account has been largely driven by the significant improvement in the trade figures.”

Southeast Asia’s largest economy posted a $1.5 billion trade surplus in December, the biggest excess in more than two years, official data showed Feb. 3.

The yield on the government’s benchmark 10-year bonds declined two basis points to 8,8 percent, Inter Dealer Market Association data shows.

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