Bloomberg News

Rupiah Reverses Gain on Speculation Importers Buying Dollars

February 02, 2012

Feb. 2 (Bloomberg) -- Indonesia’s rupiah fell, retreating from near a 12-week high, on speculation importers stepped up purchases of dollars to take advantage of a more favorable exchange rate.

The rupiah advanced earlier on optimism investors will plow more money into emerging-market assets after reports signaled manufacturing is improving in the U.S. and China. Global funds added rupiah-denominated government bonds in January at the fastest pace in 18 months, driving 10-year yields to the lowest on record.

“Importers may be tempted to buy the dollar especially noting the fact that we haven’t seen this kind of level for some time,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore.

The rupiah weakened 0.2 percent to 9,000 per dollar as of 4:45 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency rose as much as 1.2 percent to 8,878 earlier, just shy of the 12-week high of 8,875 it reached on Jan. 25.

The U.S. 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. Fifty is the dividing line between contraction and 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 sixth 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 due May 2022 fell one basis point, or 0.01 percentage point, to 5.33 percent, according to prices from the Inter-Dealer Marketing 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: Andrew Janes, 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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