Indonesia Rupiah Rises as Economic Growth Boosts Capital Inflow
Indonesia’s rupiah advanced, snapping two days of losses, as investors increased holdings of the nation’s bonds and stocks to benefit from faster economic growth.
Gross domestic product may expand 6.3 percent to 6.8 percent this year, after growing 6.1 percent in 2010, Bank Indonesia Governor Darmin Nasution told reporters in Jakarta yesterday. Consumer-price increases, which eased to a 12-month low of 5.54 percent in June, may reach 4 percent to 6 percent in 2011, Nasution said. Global funds boosted holdings of government bonds by 22 percent this year through July 8 to 239.3 trillion rupiah ($27.9 billion), according to latest figures from the debt management office.
“Positive comments from Bank Indonesia are supporting the rupiah,” said Mika Martumpal, a currency analyst at PT Bank Commonwealth in Jakarta. “Growth is strong and inflation has been tamed. That’s supporting appetite for Indonesian assets.”
The rupiah strengthened 0.4 percent to 8,548 per dollar as of 4:25 p.m. in Jakarta, according to data compiled by Bloomberg. That’s the biggest gain since July 1, when the currency advanced 0.5 percent.
Overseas investors purchased $1.7 billion more Indonesian shares than they sold this year, exchange data show.
Ten-year benchmark bonds were little changed today. The yield on the 8.25 percent note due July 2021 was unchanged at 7.32 percent, according to prices from the Inter-Dealer Market Association.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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