Indonesia's Rupiah Has Longest Winning Streak in 3 Years on Growth Outlook

Indonesia’s rupiah rose for a seventh day, the longest winning streak since February 2007, on optimism economic growth in Southeast Asia’s biggest economy will boost demand for its assets.

The currency climbed to a three-year high after overseas investors pumped $218 million into Indonesian stocks in the last four days, boosting net purchases for the year to $1.4 billion. Economic growth may accelerate to 6 percent in the second half of 2010, following a 5.8 percent increase in the first, the finance ministry said on July 26.

“Investors are buying riskier assets, including in Indonesia, on economic growth” prospects, said Tetsuo Yoshikoshi, a senior economist at Sumitomo Mitsui Banking Corp. in Singapore. “We are seeing funds flowing into stocks and that has pushed the rupiah higher.”

The rupiah appreciated 0.2 percent to trade at 8,960 per dollar as of 10:37 a.m. in Jakarta, according to data compiled by Bloomberg. The currency reached 8,933, the highest level since June 2007.

The central bank may intervene to curb gains at the 8,900 level, Yoshikoshi said. Policy makers can try to influence exchange rates by buying or selling currencies.

Government bonds climbed this month before a monetary policy review next week. Bank Indonesia will leave its benchmark interest rate unchanged at a record-low 6.5 percent on Aug. 4, according to a Bloomberg survey. The yield on the benchmark 10- year paper slid 28 basis points in July to 8.07 percent.

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

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