Indonesia’s rupiah gained, trading near its strongest level in a week, on optimism that the government will take firm measures to combat inflation. Bonds were unchanged.
The country’s state food company, Bulog, will import more rice to help ease consumer prices, Trade Minister Mari Pangestu said on Dec. 22. Southeast Asia’s largest economy is targeting inflation to slow to 5.3 percent next year from an estimated 6.5 percent this year, Finance Minister Agus Martowardojo said today.
Indonesia is taking other forms of “administrative measures” including increasing food supply to manage inflation, said Joanna Tan, a regional economist at Forecast Singapore Pte, in Singapore. “They are not raising interest rates because that might shake the stability of the rupiah.”
The rupiah gained 0.1 percent to 9,024 per dollar as of 4:27 p.m. in Jakarta, its strongest level since Dec. 16. The currency has gained 4 percent this year, according to data compiled by Bloomberg.
Consumer prices in Indonesia increased 6.3 percent in November from a year earlier, the Central Bureau of Statistics said on Dec. 1. Inflation for this year is expected to reach 6.5 percent, Martowardojo said at a press briefing in Jakarta today.
The central bank will seek alternatives to interest rates increases to stem price gains, Bank Indonesia Deputy Governor Hartadi Sarwono said on Dec. 13. Interest rates were unchanged at 6.5 percent, at the last policy meeting on Dec. 3. Bank Indonesia has held off from following counterparts in China, India, Malaysia, South Korea, Thailand and Taiwan in boosting borrowing costs. It will next meet on Jan. 5.
Ten-year government bonds were unchanged. The yield on the 11 percent note maturing in November 2020 was unchanged at 7.71 percent, according to the Inter Dealer Market Association.
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