Rupiah Forwards Gains for Fourth Week, Bonds Rise After Inflows

Indonesia’s rupiah forwards gained for a fourth week and government bonds advanced after overseas investors pumped money into the nation’s assets.

Foreign funds bought $391 million more local stocks than they sold this week through yesterday, the most since September, exchange data show. They added 2.41 trillion rupiah ($249 million) to local-currency sovereign debt last week, the latest finance ministry figures show. The economy expanded by more than 6 percent for a ninth quarter in the three months through December, the government reported on Feb. 5.

“The rupiah is supported by inflows into stocks and bonds on the back of solid macro fundamentals,” said Wiling Bolung, the head of treasury at PT Bank ANZ Indonesia in Jakarta. “Dollar supply in the market has improved significantly from early January, giving the rupiah more room to strengthen.”

One-month non-deliverable forwards rose 0.3 percent today and this week to 9,660 per dollar as of 4:26 p.m. in Jakarta, data compiled by Bloomberg show. The contracts traded at a 0.1 percent premium to the spot rate, which strengthened 0.3 percent today to 9,667, prices from local banks show. A daily fixing used to settle the derivatives was set at 9,685 today by the Association of Banks in Singapore, compared with 9,727 yesterday.

Fixing Investigated

The rupiah’s one-month implied volatility, which measures expected exchange-rate swings used to price options, was unchanged today and this week at 6.5 percent.

Bank Indonesia will ask local lenders to create a new benchmark as the Monetary Authority of Singapore investigates the offshore fixing of the Association of Banks in Singapore to determine whether there has been any manipulation, Deputy Governor Hartadi Sarwono said yesterday. Malaysia’s central bank told local lenders to use an onshore reference rate to settle foreign-exchange derivative contracts, a person familiar with the matter said on Jan. 29.

The yield on Indonesia’s 5.625 percent bonds due May 2023 fell two basis points today and this week to 5.25 percent, prices from the Inter Dealer Market Association show. A basis point is 0.01 percentage point.

The finance ministry plans to raise a record 15 trillion rupiah by offering three-year sukuk for individual investors today through Feb. 22 with a coupon of 6 percent, Dahlan Siamat, Islamic financing director at the debt management office said today. Similar-maturity non-Islamic government debt yields 4.51 percent.

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