Bloomberg News

Rupiah Rebounds From Three-Year Low on Intervention Speculation

December 10, 2012

Indonesia’s rupiah gained the most in two weeks, rebounding from a three-year low, on speculation the central bank intervened in the market to stabilize the currency.

Bank Indonesia will hold its benchmark rate at a record-low 5.75 percent for a 10th month tomorrow, according to all 18 economists surveyed by Bloomberg. The monetary authority continues to reduce the local currency’s volatility in line with its fundamentals, it said in a Nov. 8 statement on its website. Indonesia’s trade balance swung to a shortfall of $1.5 billion in October, indicating the current account will probably remain in deficit for a fifth straight quarter.

“The rupiah tends to approach new lows, but the central bank seeks to stabilize the exchange rate,” said Taufan Tito, a Jakarta-based foreign-exchange dealer at PT Bank Rakyat Indonesia. “Investors want the reference rate raised considering the current-account deficit but it will probably be steady this year.”

The rupiah strengthened 0.2 percent to 9,635 per dollar as of 3:28 p.m. in Jakarta, the biggest gain since Nov. 26, prices from local banks compiled by Bloomberg show. It reached 9,733 earlier, the weakest level since September 2009. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 13 basis points, or 0.13 percentage point, to 5.5 percent.

The yield on the government’s 7 percent bonds due in May 2022 climbed one basis point to 5.38 percent, prices from the Inter Dealer Market Association show.

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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