Indonesia Rupiah Advances Most Since March on Political Optimism

The rupiah rose the most since March on speculation Indonesia’s presidential candidates will announce their running mates today, reducing political uncertainty.

Jakarta Governor Joko Widodo said he may name his vice presidential nominee today, with Corruption Eradication Commission chief Abraham Samad and former vice president Jusuf Kalla among those being discussed. The Widodo-Kalla pair led a survey by Indikator Politik Indonesia with 44.2 percent support, followed by 29 percent for Prabowo Subianto and Hatta Rajasa. The nation’s deposit insurance agency raised its maximum guaranteed rate to 7.75 percent yesterday, from 7.5 percent.

“Widodo-Kalla seem most popular, but either pairing should be responded to positively as it’s certainty that the market wants,” said Dian Ayu Yustina, economist in Jakarta at PT Bank Danamon Indonesia. “With two strong contenders emerging, we could have only one round of elections.”

The rupiah advanced 0.7 percent to 11,461 per dollar as of 9:39 a.m. in Jakarta, the strongest level since April 22, prices from local banks show. In the offshore market, one-month non-deliverable forwards climbed 0.7 percent to 11,471, trading 0.08 percent weaker than the onshore spot rate, data compiled by Bloomberg show.

Bank Indonesia set a fixing used to settle the forwards at 11,525 per dollar yesterday, while today’s rate will be posted at 10 a.m. in Jakarta. One-month implied volatility, a measure of expected currency swings used to price options, rose 23 basis points, or 0.23 percentage point, to 9.47 percent.

Subianto said yesterday that current President Susilo Bambang Yudhoyono approved for Rajasa, the coordinating minister for the economy, to resign from his post and to participate in the elections. Subianto declined to say whether Rajasa will be his vice-presidential running mate.

The yield on the government’s 8.375 percent notes due March 2024 fell two basis points to 8.05 percent, according to the Inter Dealer Market Association.

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

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Anil Varma, Andrew Janes

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