Bloomberg News

Rupiah Forwards Advance Most in Two Weeks on Growth; Bonds Rise

September 26, 2012

Indonesia’s rupiah forwards advanced the most in two weeks on speculation inflation accelerated this month, signaling consumption is boosting economic growth. Government bonds rose.

Consumer prices rose 4.61 percent in September, compared with 4.58 percent in August, a Bloomberg survey of eight economists showed before data due Oct. 1. Gross domestic product will increase 6.2 percent next year, from 6 percent in 2012, driven by “robust domestic demand,” the Organization for Economic Cooperation and Development said in a report today. Inflation is forecast to accelerate to 4.7 percent in 2013 from an average 4.2 percent this year, the OECD said.

“Faster inflation signals consumer spending is still strong, which is the biggest driver of Indonesia’s growth,” said Klara Pramesti, a research analyst in the treasury division at PT Bank Negara Indonesia in Jakarta.

Twelve-month non-deliverable forwards for the rupiah strengthened 0.3 percent to 10,103 per dollar as of 9:14 a.m. in Jakarta, the most since Sept. 14, data compiled by Bloomberg show. The contracts, which are agreements to buy or sell assets at a set price and date, traded at a 5.2 percent discount to the spot rate. Non-deliverable forwards are settled in dollars.

The contracts gained 0.5 percent this month, paring their quarterly decline to 1.1 percent and 2012 loss to 4.8 percent.

The rupiah traded at 9,600 per dollar, having closed at 9,601 yesterday, prices from local banks compiled by Bloomberg show. It touched 9,628 yesterday, the weakest level since May 31, and has declined 2 percent this quarter in the worst performance among Asia’s 11 most-traded currencies.

One-month implied volatility, which measures exchange-rate swings used to price options, rose 88 basis points, or 0.88 percentage point, to 7.13 percent, the highest since Aug. 13.

The government’s 7 percent bonds due May 2022 advanced for the first time in eight days, pushing the yield down two basis points, or 0.02 percentage point, to 6.04 percent, prices from the Inter Dealer Market Association show. The yield declined 11 basis points this quarter.

To contact the reporter on this story: Yudith Ho in Jakarta at yho35@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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