Rupiah Rises as Bank Indonesia Holds Reference Rate; Bonds Drop

Indonesia’s rupiah advanced the most in five weeks after the central bank held its benchmark interest rate at a record low and predicted inflation will remain manageable. Bonds fell.

Bank Indonesia held its reference rate at 5.75 percent today, as forecast by all 21 economists surveyed by Bloomberg. The monetary authority predicted that consumer-price gains will be within 3.5 percent to 5.5 percent in 2013.

“Aside from maintaining rates, Bank Indonesia also said they are confident future inflation will be manageable, which helps the rupiah strengthen,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta.

The rupiah rose 0.5 percent to 9,163 per dollar as of 4:45 p.m. in Jakarta, the biggest gain since March 7, according to prices from local banks compiled by Bloomberg. The currency reached 9,208 after an 8.6-magnitude earthquake struck off Aceh province yesterday, the weakest level since March 23.

One-month implied volatility, which measures exchange-rate swings used to price options, was unchanged at 6.75 percent for a sixth day.

The rupiah, the worst performer of 2012 among the 10 most- traded Asian currencies excluding the yen, weakened this year because of dollar demand from importers and concerns about a global economic slowdown and faster domestic inflation, the central bank said today, adding it has intervened in the foreign-exchange and bond markets to stabilize the currency.

The yield on the government’s 7 percent bonds due May 2022 climbed three basis points, or 0.03 percentage point, to 6 percent, the highest level since March 16, according to closing prices from the Inter Dealer Market Association.

To contact the reporter on this story: Yudith Ho in Singapore at yho35@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.