Bloomberg News

Indonesia’s Rupiah, Bonds Complete Weekly Gain on Funds Inflows

October 14, 2011

Oct. 14 (Bloomberg) -- Indonesia’s rupiah gained, snapping a five-week decline, and bonds rose as foreign funds boosted holdings of the nation’s assets.

Government debt rallied for a third week, pushing the yields to record low, as the central bank lowered its benchmark interest rate by 25 basis points to 6.50 percent on Oct. 11 and purchased sovereign bonds this month. Overseas investors bought $237 million more Indonesian shares than they sold in the first four days of this week, according to exchange data.

“We saw funds coming into Indonesian markets,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta. “The confidence has returned as Bank Indonesia has managed the situation well. Certainly, the investor sentiment has turned positive.”

The rupiah appreciated 0.6 percent this week to 8,848 per dollar as of 4 p.m. in Jakarta, according to prices from local banks complied by Bloomberg. The currency declined more than 4 percent in the previous five weeks. The yield on the 10-year bond fell 49 basis points, or 0.49 percentage point, to 6.38 percent today, according to the Inter-Dealer Market Association.

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.

Bank Indonesia is selling dollars when needed to ease volatility in the currency, Deputy Governor Hartadi Sarwono said Oct. 7.

--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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