Indonesia’s rupiah declined by the most in more than a week after July exports contracted for a fourth month and imports increased by the least since November 2009, signs Europe’s debt crisis is hurting the local economy.
Falling overseas shipments helped make the rupiah Asia’s worst-performing currency last month as it dropped 1.5 percent. Indonesia’s trade deficit narrowed to $177 million, the smallest since the nation last posted a surplus in March, as import growth slowed to 0.75 percent from 11 percent in June, the statistics bureau reported yesterday. Government bonds rose.
“The rupiah will continue to underperform regional currencies,” said Gundy Cahyadi, an economist at Oversea- Chinese Banking Corp. in Singapore. “We may see the trade deficit widen again.”
The rupiah weakened 0.3 percent to 9,589 per dollar as of 3:17 p.m. in Jakarta, the biggest decline since Aug. 28, according to prices from local banks compiled by Bloomberg. One- month implied volatility, which measures exchange-rate swings used to price options, declined 75 basis points, or 0.75 percentage point, to 6.5 percent.
Exports decreased 7.3 percent in July from a year earlier, compared with a 16 percent contraction the previous month, the government reported. The European Union accounts for 18 percent of Indonesian exports. The trade shortfall reached $1.3 billion in June.
The yield on the government’s 7 percent bonds due May 2022 fell three basis points, or 0.03 percentage point, to 6.07 percent, the lowest level since Aug. 24, prices from the Inter Dealer Market Association show.
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