Rupiah Snaps Two-Day Gain on Speculation Policy Rate to Be Held

Indonesia’s rupiah snapped a two-day gain ahead of a central bank rate decision at which economists predict borrowing costs will be left unchanged after inflation accelerated last month.

Bank Indonesia will keep its benchmark interest rate at 5.75 percent when it meets on April 12 after cutting it by 25 basis points in February, according to all 18 economists surveyed by Bloomberg. Consumer-price gains quickened for the first time in seven months to 3.97 percent in March, from 3.56 percent in February, official data show.

“The market is watching the Bank Indonesia rate decision and inflation, which has already picked up,” said Taufan Tito, a Jakarta-based foreign-exchange dealer at PT Bank Rakyat Indonesia, the nation’s second-largest bank by market value. The rupiah will probably trade between 9,100 and 9,200 per dollar this week, he said.

The rupiah dropped 0.3 percent to 9,175 per dollar as of 4:04 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. One-month implied volatility, which measures exchange-rate swings used to price options, held at 6.75 percent for a fourth day.

The rupiah strengthened as much as 1.5 percent to a seven-week high of 9,007 earlier. Bank Indonesia will continue to monitor and intervene in the foreign-exchange and secondary bond markets to stabilize the currency, according to a statement posted on its website March 8.

The yield on the government’s 7 percent bonds due May 2022 was little changed at 5.94 percent, according to closing prices from the Inter-Dealer Market Association.

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