Bloomberg News

Indonesia Rupiah, Bonds Rally; Funds Buy Most Debt in 18 Months

February 02, 2012

Feb. 2 (Bloomberg) -- Indonesia’s rupiah rose the most since September and bonds rose on speculation investors will plow more money into emerging-market assets after reports signaled global manufacturing is improving.

The currency strengthened for a third day after economic data yesterday showed U.S. manufacturing grew last month at the fastest pace since June and expansion in China exceeded economists’ forecasts. Global funds added rupiah-denominated government bonds last month at the fastest pace in 18 months, driving 10-year yields to the lowest on record.

“Indonesia is benefiting from the improvement in global risk appetite,” said Agung Ananda, a foreign-exchange trader at Indonesia Eximbank in Jakarta. “The market is turning a bit more optimistic on the rupiah and the economic outlook in the short term.”

The rupiah appreciated 1.2 percent to 8,878 per dollar as of 9:05 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency reached 8,875 on Jan. 25, the strongest level since Nov. 1.

The Institute for Supply Management’s manufacturing index climbed to 54.1, from 53.1 in December. China’s Purchasing Managers’ Index rose to 50.5 from 50.3, an official report showed. Figures greater than 50 indicate expansion.

Economists forecast Southeast Asia’s biggest economy expanded at an annual pace of 6.45 percent in the final quarter of 2011, compared with 6.54 percent in the preceding period, according to a Bloomberg News survey. The data is due on Feb. 6.

Bond Purchases

Benchmark 10-year notes gained for a fourth day as inflation cooled. Consumer prices rose 3.65 percent in January from a year earlier, versus 3.79 percent in December, the government said yesterday.

The yield on the 7 percent notes maturing in May 2022 fell six basis points, or 0.06 percentage points, to 5.28 percent, according to data compiled by Bloomberg. The rate has dropped 76 basis points this year through yesterday, based on data from Inter-Dealer Market Association.

Global investors boosted holdings of government bonds 5.9 percent in January to 236 trillion rupiah ($26.3 billion), the biggest jump since July 2010, finance ministry data show.

--Editors: Sandy Hendry, Anil Varma

%IDR

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net.

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


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