Rupiah Rises to One-Week High on Signs Growth Is Accelerating

  • Third-quarter GDP data due Thursday forecast to show pickup
  • Government aims to spend 94 percent of budget by year-end

Indonesia’s rupiah rose to a one-week high and bonds advanced amid signs economic growth is accelerating as government spending picks up.

Gross domestic product increased 4.8 percent last quarter, compared with 4.67 percent in the previous three months, according to the median estimate in a Bloomberg survey before figures due Thursday. The government has spent 70 percent of the 2015 budget, President Joko Widodo said on Monday, double the proportion in late June. Sovereign debt has rallied after a report released the same day showed inflation eased to an 11-month low in October.

The rupiah appreciated as much as 0.9 percent to 13,435 a dollar, the strongest since Oct. 23, before closing little changed at 13,558 , according to prices from local banks. The currency has rallied 1 percent this week following a 7 percent surge in October that was the biggest in emerging markets worldwide.

“There’s an improvement in sentiment toward Indonesia," said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore. “Inflation is coming down and you have government spending up. The rupiah still faces renewed pressure to weaken as the Fed still has to raise rates."

Opinion is divided on whether the Federal Reserve will increase borrowing costs before the end of the year. There’s a 52 percent chance of liftoff in December and 86 percent odds of it happening before the end of the first half of 2016, futures contracts show.

The government is expected to disburse as much as 94 percent of its budget by the end of the year, President Widodo said. He has asked ministries to begin tender auctions for 2016 projects to prevent economic growth from slowing.

Government bonds rose for a second day, pushing the yield on the notes due September 2026 down four basis points to a one-week low of 8.75 percent, according to the Inter Dealer Market Association. The two-year yield fell three basis points to 8.49 percent.

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