Indonesia Bonds Complete Third Weekly Advance on Growth, Yields
Indonesia’s government bonds completed a third weekly advance on speculation foreign investors will add to holdings of the nation’s debt to take advantage of the country’s growth outlook and relatively high yields.
Bank Indonesia left its benchmark interest rate unchanged at 6.75 percent yesterday to boost growth, as predicted by all 10 economists surveyed by Bloomberg. Benchmark rates are a maximum 0.25 percent in the U.S. and Japan. Overseas holdings of Indonesia’s sovereign bonds rose 26 percent this year to 247.2 trillion rupiah ($28.8 billion) through Sept. 5, debt management office data show.
“If you look at BI’s stance yesterday, they are not alarmed about negative shocks from Europe and the U.S.,” said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corp. in Singapore. “Indonesia is a story of growth and that is supporting inflows into bonds.”
The yield on the 8.25 percent securities due July 2021 declined 43 basis points, the biggest weekly decline this year, to 6.42 percent today, according to prices from the Inter-Dealer Market Association. Onshore financial markets were shut from Aug. 29 to Sept. 2 for the Id-ul-Fitr holidays.
Gross domestic product will increase 6.5 percent this year, the most since 1998, President Susilo Bambang Yudhoyono said last month.
The rupiah was little changed from Aug. 26 at 8,573 per dollar as of 3:25 p.m. in Jakarta, according to data compiled by Bloomberg. The currency dropped 0.1 percent from yesterday.
The rupiah has climbed 4.7 percent this year, the second- best performer among Asia’s 10-most traded currencies excluding the yen. The currency will continue to strengthen on capital inflows, Bank Indonesia said in a statement after its rate decision yesterday. Overseas investors bought $64 million more Indonesian stocks than they sold in the first four days of the week, according to exchange data.
To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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