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Rupiah Gains Most in a Month on U.S. Confidence, Europe Loans

Feb. 29 (Bloomberg) -- Indonesia’s rupiah climbed the most in five months after U.S. consumer confidence rose more than expected and as the European Central Bank pumps loan money into euro-area lenders, spurring demand for emerging-market assets.

The Jakarta Composite Index of shares advanced the most since November 4 after the Conference Board’s gauge of U.S. consumer confidence increased to 70.8 in February, the highest in a year and more than the reading of 63 forecast in a Bloomberg survey. The European Central Bank will probably grant 470 billion euro ($633 billion) of three-year loans to lenders today as part of its longer-term refinancing operation, according to a Bloomberg News survey.

“Now is the time for a rebound,” said Nurul Eti Nurbaeti, head of treasury research at PT Bank Negara Indonesia in Jakarta. “Positive sentiment about the global economic situation has the potential to push the rupiah to appreciate.”

The rupiah climbed 1.3 percent to 9,079 per dollar as of 4 p.m. in Jakarta, the most since Jan. 26, according to prices from local banks compiled by Bloomberg. The currency declined 0.4 percent this month as foreign funds sold $356 million more local stocks than they bought, according to exchange data.

Inflation accelerated to 3.8 percent in February, from 3.65 percent in January, according to the median estimate of economists surveyed by Bloomberg before data due tomorrow. An increase in subsidized fuel prices may push inflation above the central bank’s target of a maximum 5.5 percent this year, Governor Darmin Nasution said on Feb. 23.

The yield on the government’s 7 percent bonds due May 2022 fell 15 basis points, or 0.15 percentage points, to 5.51 percent, according to midday prices from the Inter Dealer Market Association. The yield has gained 9 basis points this month as international investors reduced holdings of government debt by 2.4 percent to 230.34 trillion rupiah ($25.5 billion).

To contact the reporters 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.

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