Rupiah in Longest Rally Since 2010 as Equities and Bonds Advance

  • Ten-year government debt yield declines the most in a month
  • Central bank unlikely to cut too quickly, CBA's Ji says

Indonesia’s rupiah rose for a 10th day in its longest winning streak since 2010 amid speculation the central bank won’t cut interest rates too aggressively.

The currency closed up 0.4 percent to 13,294 a dollar in Jakarta, according to prices from local banks, and rose to the highest level since Oct. 15 earlier. It’s rallied 1.6 percent since Feb. 17. The Jakarta Composite Index climbed 1.2 percent, gaining for a sixth day, as developing-nation assets rose Wednesday after U.S. manufacturing data beat estimates and on speculation previous losses were overdone.

Indonesia’s government has been calling on the central bank to cut borrowing costs faster to spur growth, with President Joko Widodo saying in an interview last month that he wanted the key rate to “fall, fall, fall, fall and keep falling.” Bank Indonesia lowered borrowing costs in January and February but, given quicker inflation last month, it’s unlikely to ease too fast, said Andy Ji, foreign-exchange strategist at Commonwealth Bank of Australia in Singapore.

“The Indonesian rupiah is a high-yielding currency that benefits from the risk-on sentiment,” he said. “People are not expecting aggressive rate cuts."

Inflation was 4.42 percent in February, compared with 4.14 percent in January and the median estimate of 4.36 percent in a Bloomberg survey.

The yield on the sovereign bonds due September 2026 fell 13 basis points, the biggest drop since Jan. 29, to 8.14 percent, according to the Inter Dealer Market Association. Indonesian debt is “one of our stronger calls going forward” because it has the highest yield in Asia, said Jens Nystedt, the New York-based portfolio manager of emerging-market debt at Morgan Stanley Investment Management.

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