Bloomberg News

Rupiah, Bonds Gain After Funds Boost Indonesian Share Holdings

October 13, 2011

Oct. 13 (Bloomberg) -- Indonesia’s rupiah rose, snapping a four-day drop, and bonds advanced for a sixth day after global funds boosted holdings of the nation’s assets to benefit from growth in Southeast Asia’s biggest economy.

International investors bought $131 million more local shares than they sold in the first three days of this week, according to exchange data. The economy may expand 6.6 percent in 2011 after growing 6.1 percent last year, Bank Indonesia Governor Darmin Nasution said on Oct. 11. The central bank is selling dollars when needed to ease volatility in the rupiah, Deputy Governor Hartadi Sarwono said on Oct. 7.

“Funds are coming back into the stock market,” said Lindawati Susanto, head of treasury at PT Bank Resona Perdania in Jakarta. “The central bank has committed to staying in the market to ease volatility.”

The rupiah gained 0.6 percent, the most in two weeks, to 8,871 per dollar as of 4 p.m. in Jakarta, according to prices from local banks complied by Bloomberg. Foreign ownership of the nation’s debt rose 0.7 percent to 214 trillion rupiah ($24 billion) in the first two days of this week, according to data from the finance ministry’s website.

The central bank will purchase government bonds, Hendar, director of monetary policy who uses only one name, said on Oct. 3.

Government bonds rallied as Bank Indonesia lowered its benchmark interest rate by 25 basis points to 6.50 percent on Oct. 11.

The yield on the government’s 10-year bonds fell 11 basis points, or 0.11 percentage point, to 6.44 percent today, according to the Inter-Dealer Market Association. The rate has dropped 43 basis points so far this week to the lowest level in a month.

--Editors: Greg Ahlstrand

To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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