Rupiah Forwards Rise Most in Seven Weeks After Global Bond Sale

Indonesia’s rupiah forwards rose the most in seven weeks after a sovereign global debt sale drew bids for more than four times the amount raised. Local-currency government bonds fell.

The country borrowed $3 billion yesterday by tapping the international market for the first time in 2013, with investors submitting $12.5 billion of bids, according to a statement on the debt management office’s website. Some $1.5 billion of 10-year notes were sold at 3.50 percent, the lowest ever rate for non-Islamic securities denominated in dollars.

“The rupiah is supported by the global bond sale, which was heavily oversubscribed and achieved a good rate,” said Nurul Eti Nurbaeti, Jakarta-based head of treasury research at PT Bank Negara Indonesia. “The sale revived investors’ confidence in investing in the country.”

One-month non-deliverable forwards strengthened 0.4 percent to 9,747 as of 3:09 p.m. in Jakarta, the biggest gain since Feb. 20, data compiled by Bloomberg show. They traded at a 0.1 percent discount to the spot rate, which advanced 0.2 percent to 9,733 per dollar, prices from local banks compiled by Bloomberg show.

A daily fixing used to settle the derivatives was set at 9,743 by the Association of Banks in Singapore, from 9,756 yesterday. One-month implied volatility for the rupiah, a measure of expected moves in the exchange rate used to price options, rose 26 basis points to 6.09 percent.

The yield on the 5.625 percent rupiah bonds due May 2023 climbed one basis point, or 0.01 percentage point, to 5.68 percent, the highest level since Oct. 31, according to prices from the Inter Dealer Market Association. The yield on the recently sold 3.375 percent bonds due April 2023 dropped to 3.33 percent on its first day of trading, data compiled by Bloomberg show.

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