Bloomberg News

Rupiah Rises to Seven-Year High on Easing European Debt Concern

June 06, 2011

June 6 (Bloomberg) -- Indonesia’s rupiah rose to a seven- year high on optimism European Union officials will prepare a new aid plan for Greece, quelling fears the region’s debt crisis will deepen and reducing demand for dollars. Bonds gained.

The currency rose for a second day as EU and International Monetary Fund officials agreed to pay the fifth installment of a 110 billion-euro ($161 billion) bailout agreed last year. Jean- Claude Juncker, who leads the group of euro-area finance ministers, and EU Economic and Monetary Commissioner Olli Rehn are scheduled to speak in France today.

The rupiah advanced 0.2 percent to 8,513 per dollar as of 4:07 p.m. in Jakarta, according to data compiled by Bloomberg. The currency touched 8,506 earlier, the strongest level since March 2004.

“There are indications that Greece will get help from the European Union and that may end the debt crisis,” said Lindawati Susanto, head of treasury at PT Resona Perdania in Jakarta. “Risk sentiment is back on. Locally, inflation is manageable and the central bank is expected to hold its interest rate this week.”

Bank Indonesia will meet on June 9 to review its benchmark interest rate, which was raised by a quarter of a percentage point to 6.75 percent in February and has since been left unchanged. Inflation slowed for a fourth month in May, slipping below 6 percent for the first time since October, the Central Bureau of Statistics reported last week.

Indonesia’s 10-year government bonds advanced. The yield on the 8.25 percent note due July 2021 fell two basis points, or 0.02 percentage point, to 7.35 percent, according to closing prices from the Inter-Dealer Market Association.

The finance ministry will sell 5 trillion rupiah ($587 million) of debt at an auction tomorrow, it said in an e-mailed statement on June 3.

--Editors: James Regan, Ven Ram

To contact the reporter on this story: Suryani Omar in Singapore at somar6@bloomberg.net

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


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