Rupiah, Indonesia Bonds Rise for a Second Day as Stocks Rally

Indonesia’s rupiah and bonds gained for a second day after local stocks rose the most since February.

The Jakarta Composite Index of shares snapped five days of losses to climb 2 percent after German Finance Minister Wolfgang Schaeuble said yesterday that the two nations will do “everything necessary” to ensure Greece stays in the single-currency zone.

“Global risk levels have eased, and we’ve seen regional shares advance today, which supports the currency,” said Mika Martumpal, a currency analyst at PT Bank CIMB Niaga in Jakarta. He predicts the rupiah to trade within 9,250 to 9,450 this week.

The rupiah strengthened 0.2 percent to 9,228 per dollar as of 4:33 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 10 percent for a fourth day.

The yield on the government’s 7 percent bonds due May 2022 dropped three basis points, or 0.03 percentage point, to 6.51 percent, according to closing prices from the Inter-Dealer Market Association. The yield lost nine basis points this week.

Global funds reduced ownership of sovereign notes by 3.3 trillion rupiah ($352 million) this month through May 16, according to data from the finance ministry.

“The current patch of poor sentiment has raised concerns about the risks of portfolio outflows,” analysts at DBS Group Holdings Ltd. led by David Carbon wrote in a report today. Indonesia may post its first full-year current-account deficit in 2012 since the Asian financial crisis, they wrote.

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