Rupiah Strengthens Most in Three Weeks After Obama Re-Election

Indonesia’s rupiah strengthened by the most in three weeks after U.S. President Barack Obama was re-elected for a second term, spurring appetite for emerging- market assets.

The Jakarta Composite (JCI) index of shares gained by the most in a month after Obama defeated Republican challenger Mitt Romney, who said he wouldn’t reappoint Federal Reserve Chairman Ben S. Bernanke. The Fed announced in September it would buy $40 billion of mortgage debt per month to spur growth. Bank Indonesia will hold its reference rate at record-low 5.75 percent tomorrow, according to all 16 economists surveyed by Bloomberg News.

“The markets, especially emerging ones, preferred an Obama victory,” said Taufan Tito, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta.

The rupiah rose 0.3 percent to 9,595 per dollar as of 4:26 p.m. in Jakarta, the most since Oct. 17, prices from local banks compiled by Bloomberg show. The currency rebounded, after earlier declining to 9,668, the weakest level since October 2009. One-month implied volatility, a measures of exchange-rate swings used to price options, was steady at 5 percent.

“There is still room for the rupiah to hit new lows as demand for dollars adds up,” Tito said.

Indonesia sold 60 billion yen ($747 million) of samurai bonds yesterday, the third sale of such notes since 2009, at a yield of 1.13 percent, said Robert Pakpahan, the acting director general of the Finance Ministry’s debt management office. Samurai bonds are yen-denominated securities sold in Japan by foreign borrowers.

The yield on the government’s 7 percent notes maturing in May 2022 rose to 5.63 percent from 5.62 percent yesterday, the lowest level since March 5, according data compiled by Bloomberg based on closing prices from the Inter Dealer Market Association.

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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