Rupiah Forwards Advance on Stock Inflows; Bonds Little Changed

Indonesia’s three-month rupiah forwards rose to within 0.3 percent of a two-month high after international investors increased their holdings of the nation’s equities. Government bonds were little changed.

Funds based overseas bought $70 million more of local stocks than they sold in the first two days of this week, boosting net purchases in 2013 to $1 billion, exchange data show. Bank of Japan is expected to keep policy unchanged at a two-day meeting which starts today, according to a survey of economists by Bloomberg News. European Central Bank President Mario Draghi said yesterday “enormous progress” has been made in Spain, easing concern over the European debt crisis.

“Global central banks are taking ultra-loose monetary policies,” said Mika Martumpal, a currency analyst at PT Bank CIMB Niaga in Jakarta. That “means inflows into the Indonesian capital market and is good for the rupiah,” he said.

Three-month non-deliverable forwards advanced 0.1 percent to 9,691 per dollar as of 3:23 p.m. in Jakarta, data compiled by Bloomberg show. They reached 9,661 on Feb. 11, the strongest level since Dec. 4. The contracts traded at a 0.5 percent discount to the spot rate, which was little changed at 9,641, according to prices from local banks compiled by Bloomberg.

A daily fixing used to settle the derivative contracts was set at 9,643 per dollar today by the Association of Banks in Singapore. That’s 0.4 percent stronger than 9,685 on Feb. 8. Markets in the city-state were closed Feb. 11 and yesterday for the Chinese New Year holidays.

The rupiah’s one-month implied volatility, which measures expected exchange-rate swings used to price options, was little changed at 6.5 percent for an eighth day.

Asset Purchases

Bank of Japan Governor Masaaki Shirakawa and six of his nine fellow board members voted last month for a 2 percent inflation target, to be achieved “at the earliest possible time,” and pledged to begin open-ended asset purchases from January 2014.

Indonesia’s current-account deficit widened to $7.8 billion in the quarter ended December, compared with the $7.4 billion median estimate in a Bloomberg news survey and $5.3 billion in the prior period, the central bank reported today.

The yield on Indonesia’s 5.625 percent bonds due May 2023 was little changed at 5.26 percent, prices from the Inter Dealer Market Association show.

Bank Indonesia maintained its benchmark rate at a record-low 5.75 percent yesterday, as forecast by all 17 analysts surveyed by Bloomberg.

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