Rupiah Touches Two-Week High as Trade Surplus Exceeds Estimates

Indonesia’s rupiah touched a two-week high and stocks rallied as the statistics bureau reported a larger trade surplus than economists had forecast.

Exports exceeded imports by $785 million in February, more than the $760 million estimated by central bank Deputy Governor Perry Warjiyo on March 28 and the $300 million predicted by analysts in a Bloomberg survey. The nation had a $431 million deficit in January as a government ban on raw-mineral shipments took effect. Consumer-price gains eased to 7.32 percent in March, the least since June, a separate report showed.

“The improving global economy is supporting Indonesia’s exports despite the ore ban,” said Damhuri Nasution, an economist at PT Danareksa, who expected a $815 million excess. “If a tight monetary policy is maintained and the rupiah isn’t allowed to strengthen too much, we can continue to see the trade balance remaining in surplus in the months ahead.”

The rupiah climbed 0.4 percent from March 28 to close at 11,313 per dollar, prices from local banks show. It reached 11,263 earlier, the highest since March 17. Local financial markets were closed yesterday for a public holiday. The currency slid 21 percent last year, the most since 2000, even as Bank Indonesia raised its reference rate by 1.75 percentage points to 7.5 percent.

Higher interest rates and a weaker rupiah helped improve the trade balance, Sasmito Hadi Wibowo, an official at Indonesia’s statistics office, said in Jakarta today. The trade balance is expected to remain in surplus going forward, he said.

“The market isn’t so concerned by the ore export ban any more as there are other ways to boost exports,” said Tri Sulistianing Astuti, a Jakarta-based foreign-exchange dealer at PT Bank Rakyat Indonesia.

Stocks Rally

The Jakarta Composite Index of equities gained 2.2 percent, headed for the biggest advance since March 14. PT Astra International advanced 4.1 percent and PT Bank Central Asia rose 3.3 percent. Federal Reserve Chair Janet Yellen said yesterday the U.S. will need monetary stimulus for “some time.”

Improvements in Indonesia’s trade and inflation data and sustained Fed stimulus could increase room for Bank Indonesia to ease monetary policy, Andy Ferdinand, head of research at PT Batavia Prosperindo Sekuritas, said by phone today.

In the offshore market, one-month non-deliverable forwards rose 0.4 percent from last week to 11,333, trading 0.2 percent weaker than the onshore rate, data compiled by Bloomberg show. A fixing used to settle the forward contracts was set at 11,271 per dollar today by Bank Indonesia, from 11,404 on March 28.

One-month implied volatility, a measure of expected moves in the rupiah used to price options, climbed eight basis points this week, or 0.08 percentage point, to 10.76 percent.

The yield on the nation’s 8.375 percent bonds due March 2024 dropped 12 basis points to 7.87 percent, the lowest since November, according to the Inter Dealer Market Association.

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