Rupiah Drops Most in Three Weeks as Indonesia Seen Holding Rate By Yudith Ho - Sep 12, 2013 10:07 AM GMT+0700 Indonesia’s rupiah fell by the most in three weeks, trading weaker than its one-month forwards, as economists predict the central bank will keep borrowing costs steady after inflation reached a four-year high. Bank Indonesia will hold its reference rate at 7 percent after raising it by 1.25 percentage points this year, according to 16 of 23 analysts surveyed by Bloomberg before the authority meets today. Four expect a 25 basis point increase while three forecast a 50 basis point rise. Consumer prices rose 8.79 percent last month, the most since January 2009, official data showed Sept. 2. Inflation will touch 9 percent by the year-end due to costlier imports, according to PT Mandiri Sekuritas. Enlarge image Bus Conductor in Jakarta A bus conductor counts money at a booth in Jakarta. The rupiah has weakened almost 16 percent this year in Asia’s worst performance. Photographer: Dimas Ardian/Bloomberg The currency plunged 1.5 percent in the biggest drop since Aug. 20 to 11,513 per dollar as of 10:04 a.m. in Jakarta, prices from local banks show. That is 0.6 percent weaker than its its one-month non-deliverable forwards, which rose 0.6 percent to 11,440 in offshore trading, data compiled by Bloomberg show. “Bank Indonesia should raise the reference rate to manage inflation expectations arising from the weaker rupiah,” said Aldian Taloputra, a Jakarta-based economist at Mandiri Sekuritas, a unit of the nation’s largest bank, who predicts the rate will be increased to 7.25 percent. “The rupiah is allowed to move in a wider range to reflect the current-account deficit, which should help stem imports.” The rupiah has weakened almost 16 percent this year in Asia’s worst performance. Trade Deficit The nation’s trade deficit widened to a record $2.3 billion in July, weighing on the current account, which remained in shortfall for a seventh straight quarter in the three months through June. The rupiah one-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 65 basis points, or 0.65 percentage point, to 18.31 percent, least since Sept. 3, data compiled by Bloomberg show. A fixing used to settle the rupiah forwards was set at 11,321 per dollar yesterday, according to the Association of Banks in Singapore. “If the intention is to strengthen the rupiah, raising interest rates isn’t necessary yet,” said Muhammad Ikhsan, a Jakarta-based dealer at PT Bank Rakyat Indonesia. “The currency is stabilizing as exporters are starting to sell dollars as the rupiah has become too cheap.” The yield on the government’s 5.625 percent bonds due May 2023 climbed one basis point to 8.70 percent, according to prices from the Inter Dealer Market Association. The yield reached 8.69 percent yesterday, the lowest level since Sept. 3. To contact the reporter on this story: Yudith Ho in Jakarta at [email protected] To contact the editor responsible for this story: James Regan at [email protected]
Posted on: Thu, 12 Sep 2013 06:31:26 +0000
Trending Topics
Recently Viewed Topics
© 2015