Indonesia’s 10-year government bonds slumped the most since 2011 as global investors pulled money from local notes amid speculation policy makers may scale back stimulus measures. The rupiah’s one-month forwards rose.
The yield on the 5.625 percent bonds due May 2023 soared 36 basis points to 6.713 percent in Jakarta, according to the Inter-Dealer Market Association. That’s the biggest increase since September 2011 for a benchmark 10-year government bonds.
The Bank of Japan today refrained from changing the one-year fixed-rate loan facility the bank has tapped into seven times, adding to concerns that the Federal Reserve may taper its monthly bond purchases that boost the supply of dollars. Global funds reduced holdings of local bonds for a sixth day on June 5, according to latest finance ministry data.
“Data continue to show outflows in both debt and equity markets, and there are signs of acceleration,” Wee-Khoon Chong, Hong Kong-based strategist at Societe Generale SA, wrote in a report today.
The rupiah fell 0.1 percent to 9,826 per dollar, according to prices from local banks compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 72 basis points to 14 percent.
The one-month non-deliverable forwards rose 1 percent, trading at a 4.2 percent discount to the spot rate quoted by Indonesian banks, data compiled by Bloomberg show. The government is concerned at the widening gap between rupiah forwards and the spot rate, Deputy Finance Minister Mahendra Siregar told reporters in Jakarta today.
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