Indonesia’s government bonds rose, pushing the yield on five-year securities to an 11-week low, after global funds increased their debt holdings by the most since January. The rupiah weakened.
Overseas investors added 4.52 trillion rupiah ($470 million) to their portfolio of local notes this month through Oct. 24, poised for the biggest inflow since January, Finance Ministry data show. Indonesia plans to raise 500 billion rupiah by offering Islamic bonds tomorrow, after a debt auction last week drew bids for three times the amount offered. The yield on 10-year bonds was 5.73 percent, less than the central bank’s record-low reference rate of 5.75 percent.
“Investors remain focused on seeking high and stable yields at the moment,” said Billie Fuliangsahar, the head of treasury at PT Bank Rabobank International Indonesia in Jakarta. “The 10-year notes have the potential to rally further to yield as low as 5.25 percent.”
The yield on the government’s 10 percent notes due July 2017 dropped four basis points from Oct. 25, or 0.04 percentage point, to 5.41 percent as of 2:25 p.m. in Jakarta, the lowest level since Aug. 9, prices from the Inter Dealer Market Association show. Indonesian markets were closed on Oct. 26 for a holiday.
The rupiah declined 0.2 percent to 9,621 per dollar, the most since Oct. 16, prices from local banks compiled by Bloomberg show. One-month implied volatility, which measures exchange-rate swings used to price options, held at 6.25 percent.
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