Indonesia 10-Year Yield Set for Biggest Weekly Drop in 5 Months
Indonesia’s government bonds advanced this week, pushing the 10-year note yield down by the most in five months, after global funds increased their holdings.
Overseas investors bought 620 billion rupiah ($64 million) more local-currency sovereign debt than they sold this month through May 7, adding to the 18 trillion rupiah of inflows in April, finance ministry data show. The central bank’s policy is focused on strengthening the currency’s stability, Deputy Governor Perry Warjiyo said last week. The rupiah was little changed for the week.
The yield on the 5.625 percent notes due May 2023 dropped 11 basis points to 5.50 percent for the week as of 10:20 a.m. in Jakarta, the most since the five days ended Dec. 14, prices from the Inter Dealer Market Association show. That compares with rates of 2.78 percent for similar-maturity Philippine bonds and 3.34 percent for Thai debt.
“The market’s appetite for Indonesia’s yield is still good despite slower growth, which is still above 6 percent,” said Fahrudin Haris Prastowo, a foreign-exchange trader at PT Bank Rakyat Indonesia in Jakarta. “Stabilizing the rupiah also helps spur inflows.”
The economy has expanded by more than 6 percent for the past 10 quarters, growing by 6.02 percent in the three months through March, the slowest pace in more than two years, from 6.11 percent in the previous quarter, according to official data released this week.
The rupiah declined 0.2 percent to 9,736 per dollar in Jakarta today and was little changed for the week, according to prices from local banks compiled by Bloomberg. It traded at a 0.3 percent premium to one-month non-deliverable forwards, which advanced 0.2 percent this week and fell 0.4 percent today to 9,764 per dollar, according to data compiled by Bloomberg.
A daily fixing used to settle derivatives was set at 9,737 today by the Association of Banks in Singapore, compared with 9,744 on May 3. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 50 basis points, or 0.50 percentage point, this week and 48 basis points today to 6.11 percent.
To contact the reporter on this story: Yudith Ho in Jakarta at firstname.lastname@example.org