Indonesia Rupiah Hits Four-Year High as Inflation Concerns Ease
Indonesia’s rupiah rose to its strongest level in almost four years after lawmakers voted to delay planned cuts to fuel subsidies, helping contain inflation. Bonds rose for a third day.
The proposal was approved on concern higher oil prices will cause inflation to accelerate, Teuku Rifky Harsya, chairman of the parliamentary commission for energy affairs, said yesterday. The central bank said full-year inflation may be less than 6 percent, compared with as much as 6.5 percent if the government had gone ahead with its plan to ban owners of private cars from buying subsidized fuel on Java island from April.
“The move to delay limiting subsidized fuel sales will help to slow inflation and that’s giving comfort to investors,” said Lindawati Susanto, head of foreign-exchange trading at PT Bank Resona Perdania in Jakarta. “A stronger rupiah will also help to manage imported inflation.”
The rupiah strengthened 0.2 percent to 8,717 per dollar as of 4:16 p.m. in Jakarta, according to data compiled by Bloomberg. It earlier touched 8,707, the strongest level since May 2007.
Consumer prices rose 6.84 percent from a year earlier in February, the least in three months, official figures show. January’s 7.87 percent increase was the biggest since April 2009.
Japan’s progress in regaining control of reactors at a nuclear power station crippled by the March 11 earthquake and ensuing tsunami has also “lifted the rupiah,” Susanto said. Radiation containment units at the Fukushima Dai-Ichi plant are intact and the situation “is on the verge of stabilizing,” a U.S. Nuclear Regulator Commission official said yesterday.
Indonesia sold 10 trillion rupiah of debt in an auction today, the Ministry of Finance’s debt management office said. The sale drew bids worth 27.9 trillion rupiah, the ministry said in a statement on its website.
The government sold 2 trillion rupiah of three-month bills, its first auction of the shorter-term notes; 2 trillion rupiah of bills maturing March 2012; 1.5 trillion rupiah of bonds maturing September 2016; and 4.5 trillion rupiah of bonds maturing July 2031, according to the statement.
Ten-year government bonds rose for a third day. The yield on the 8.25 percent note due July 2021 fell nine basis points to 8.20 percent according to closing prices from the Inter-Dealer Market Association.
To contact the reporter on this story: Suryani Omar in Jakarta at somar6@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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