Indonesian 10-Year Bond Yield Drops to 4-Week Low; Rupiah Falls

Indonesia’s bonds advanced, pushing the yield on 10-year notes to the least in four weeks, on bets the central bank will keep borrowing costs at a record low today to support growth. The rupiah weakened.

The yield on the nation’s bonds maturing in 2022 dropped for a sixth day as global funds added 1.32 trillion rupiah ($138 million) to their local debt holdings in the first two days of this week, poised to extend inflows for a second week, Finance Ministry data show. Bank Indonesia will leave its benchmark reference rate at 5.75 percent for a seventh month, according to all 22 economists in a Bloomberg survey. The decision is due around noon in Jakarta.

“We expect Bank Indonesia to keep the main policy rate unchanged to support investment-related credit,” said Prakriti Sofat, an economist at Barclays Plc in Singapore. “Positive global risk sentiment has helped the bonds.”

The yield on the government’s 7 percent notes due May 2022 declined one basis point, or 0.01 percentage point, to 5.94 percent as of 9:01 a.m. local time, the lowest level since Aug. 15, prices from the Inter Dealer Market Association show.

The rupiah fell 0.2 percent to 9,583 per dollar, the most since Sept. 5, prices from local banks compiled by Bloomberg show. One-month implied volatility, which measures exchange-rate swings used to price options, held at 5.85 percent, the lowest level since May 2.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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