Rupiah Gains on Speculation Central Bank Intervened; Bonds Rise

Indonesia’s rupiah gained on speculation the central bank sought a stronger currency to slow inflation. Bonds rose.

Bank Indonesia intervened in the foreign-exchange and debt markets to stabilize the exchange rate, according to an April 12 statement on its website. The monetary authority attributed recent losses in the rupiah, the worst performer among Asia’s 10 most-traded currencies excluding the yen this year, to expectations for faster local inflation and a global economic slowdown, and dollar demand from importers.

“Bank Indonesia hopes the strengthening rupiah will support the economy,” said Gusti Kahari, a foreign-exchange dealer at PT Bank Artha Graha Internasional in Jakarta.

The rupiah gained 0.6 percent to 9,130 per dollar as of 4:31 p.m. in Jakarta, the biggest advance in more than six weeks, according to prices from local banks compiled by Bloomberg. One-month implied volatility, which measures exchange-rate swings used to price options, was steady at 6.50 percent.

Annual inflation quickened to 3.97 percent in March from 3.56 percent the previous month, acclerating for the first time since August 2011, government data show. The central bank is shifting its policy focus to consumer-price gains from economic growth, Perry Warjiyo, director of economic research and monetary policy, said on April 17.

Bond Sale

Indonesia sold $2.5 billion of dollar-denominated bonds, with investors bidding for 3.2 times more than the amount offered, the finance ministry said yesterday.

The government issued $2 billion of notes due in April 2022 to yield 3.85 percent, or 184 basis points more than that for similar-maturity Treasuries, according to data compiled by Bloomberg. It also sold $500 million more of 5.25 percent bonds due 2042 at a yield of 4.95 percent, 181 basis points more than U.S. debt.

The yield on the government’s 7 percent bonds due May 2022 fell six basis points, or 0.06 percentage point, to a nearly two-week low of 5.93 percent, according to closing prices from the Inter Dealer Market Association.

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