May 14 (Bloomberg) -- The rupiah rose the most in more than two months as Indonesia’s presidential frontrunner Joko Widodo garnered more support from other parties, reducing political uncertainty.
Widodo said today his Indonesian Democratic Party of Struggle was joined by the National Awakening Party and the National Democratic Party in nominating him for president. He may name his vice presidential nominee on May 16, he said, with Corruption Eradication Commission chief Abraham Samad and former vice president Jusuf Kalla among those being discussed. The Widodo-Kalla pair led a survey by Indikator Politik Indonesia with 44.2 percent support, followed by 29 percent for Prabowo Subianto and Hatta Rajasa.
“Widodo-Kalla seem most popular, but either pairing should be responded to positively as it’s certainty that the market wants,” said Dian Ayu Yustina, economist in Jakarta at PT Bank Danamon Indonesia. “With two strong contenders emerging, we could have only one round of elections.”
The rupiah rose 0.8 percent to close at 11,446 per dollar, the biggest advance since March 6 and the highest level since April 21, prices from local banks show. In the offshore market, one-month non-deliverable forwards jumped 1.1 percent to 11,435, trading 0.1 percent stronger than the onshore spot rate, data compiled by Bloomberg show.
Bank Indonesia set a fixing used to settle the forwards at 11,487 per dollar today, from 11,525 yesterday. One-month implied volatility, a measure of expected currency swings used to price options, rose one basis point, or 0.01 percentage point, to 9.24 percent.
Rajasa has resigned from his post as coordinating minister for the economy and is ready to be vice presidential candidate supporting Subianto, he said in Jakarta today.
The nation’s deposit insurance agency raised its maximum guaranteed rate to 7.75 percent yesterday, from 7.5 percent, which signals tightening liquidity at banks, said Handy Yunianto, head of fixed-income research at PT Mandiri Sekuritas.
The yield on the government’s 8.375 percent notes due March 2024 fell nine basis points to 7.98 percent, according to the Inter Dealer Market Association.
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