Indonesia’s rupiah dropped by the most in six months as concern about a widening current-account deficit prompts investors to pull funds from the nation’s assets.
The currency touched the weakest level since September 2009 after overseas funds sold 2.15 trillion rupiah ($222 million) more local-currency government debt that they bought in the three days through Dec. 19, poised for the biggest weekly outflow since August, finance ministry data show. The current- account gap may widen to 2.3 percent of gross domestic product this quarter, the most since Bloomberg began compiling the data in 1997, the central bank said on Dec. 11.
“We expect the rupiah to remain an underperformer in the region,” said Prakriti Sofat, a regional economist at Barclays Plc in Singapore. “The overall balance-of-payments position remains weak, which continues to weigh on the rupiah.”
The rupiah dropped 1.4 percent to 9,785 per dollar as of 9:41 a.m. in Jakarta, the biggest drop since June 7, according to prices from local banks compiled by Bloomberg. That was the weakest level since Sept. 16, 2009. It lost 7.3 percent this year, the worst performance among Asia’s 10 most-traded currencies excluding the Japanese yen. The rupiah will weaken to 9,900 in 12 months, Sofat predicted.
Indonesia recorded a current-account deficit of 2.14 percent of GDP for the three months through September, its third quarterly shortfall in a row, central bank data show. Foreign funds have sold $36 million more local stocks than they bought this month, exchange data show.
One-month implied volatility in the rupiah, a measure of expected moves in exchange rates used to price options, was steady at 5.7 percent today and this week, compared with 13.2 percent at the end of 2011.
Government bonds advanced for a fifth day. The yield on the 7 percent bonds due in May 2022 fell nine basis points, or 0.09 percentage point, this week to 5.16 percent, prices from the Inter Dealer Market Association show. The yield fell one basis point today to the lowest level since Feb. 15.
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