Indonesia’s Rupiah Gains on Suspected Intervention; Bonds Fall

Indonesia’s rupiah rose, halting a five-day slide, on speculation the central bank is supporting the currency to help stem imported inflation. Bonds fell.

The currency sank to a 23-month low on May 4 as Bank Indonesia said it would remain in the market to keep the exchange rate stable. The central bank participated in the foreign-exchange and debt markets to stabilize the rupiah, it said last month. Growth in Southeast Asia’s largest economy cooled last quarter as Europe’s debt crisis dented exports.

“The authorities want to ensure a stable rupiah, given that the market is concerned about slowing growth and possible capital outflows,” said Taufan Tito, a Jakarta-based foreign-exchange dealer at PT Bank Rakyat Indonesia. The intervention has been “light and in small amounts,” he said.

The rupiah strengthened 0.5 percent to 9,228 per dollar as of 3:37 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency reached 9,276 on May 4, a level not seen since June 7, 2010.

The currency’s one-month implied volatility, which measures exchange-rate swings used to price options, jumped 100 basis points, or 1 percentage point, to 7.5 percent.

The economy grew at an annual rate of 6.3 percent in the first quarter, compared with 6.49 percent in the final three months of 2011, the statistics bureau said today. The median forecast was for a 6.31 percent gain in a Bloomberg News survey.

The yield on the government’s 7 percent bond maturing in May 2022 climbed one basis point to 6.06 percent, according to data compiled by Bloomberg. The yield on the benchmark 10-year notes has risen 72 basis points since January.

Consumer prices increased 4.5 percent in April from a year earlier, the most since September, official data show. The government failed to push a proposed fuel-price increase through parliament in March. It plans limit sales of subsidized fuel from this month, President Susilo Bambang Yudhoyono said in Jakarta on April 26.

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