Rupiah Weakens Beyond 11,000 a Dollar for First Time Since 2009

Rupiah Weakens Beyond 11,000 a Dollar for First Time Since 2009

The rupiah weakened beyond 11,000 per dollar for the first time since April 2009 on concern Indonesia will struggle to rein in a record current-account gap. The nation’s trade shortfall was $2.3 billion in July, compared with the $393 million median estimate in a Bloomberg survey of economists. The current-account deficit will be about 4 percent of gross domestic product or more this quarter, from 4.4 percent in the previous period, Bank of America Merrill Lynch economist Hak Bin Chua wrote in a note yesterday. This is higher than the government’s target of 3 percent this quarter.The rupiah slid 0.5 percent to 11,035 per dollar at 11:31 a.m. in Jakarta, the weakest level since April 23, 2009, prices from local banks compiled by Bloomberg show. The spot rate was 4.3 percent stronger than the one-month non-deliverable forwards, which was little changed at 11,515, according to data compiled by Bloomberg.

“Domestic demand and imports are still too strong, which isn’t helping the current account,” said Andy Ji, a foreign-exchange strategist at Commonwealth Bank of Australia in Singapore. “The spot rate will slowly but surely weaken, but it’s expensive to take a long dollar position in the offshore market, so the gap shouldn’t widen too much.”

Imports rose 6.5 percent from a year earlier to $17.4 billion in July, the largest amount in data compiled by Bloomberg going back to January 2008, as exports contracted for a 16th consecutive month.

Fixing, Volatility

A fixing used to settle rupiah forwards was set at 11,293 per dollar, from 11,260 yesterday, according to the Association of Banks in Singapore, 2.3 percent weaker than the spot rate. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 103 basis points, or 1.03 percentage points, to 17.77 percent, data compiled by Bloomberg show.

The yield on bonds due May 2023 climbed five basis points to 8.45 percent, according to prices from the Inter Dealer Market Association. The yield has risen 3.26 percentage points this year.

“Whatever you gained from Indonesian assets in the last two-and-a-half years would probably be wiped out by hedging against rupiah in the offshore market,” said Commonwealth Bank of Australia’s Ji.

To contact the reporter on this story: Yudith Ho in Jakarta at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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