Rupiah at One-Month High as Dollar Bond Seen Boosting Reserves

Indonesia’s rupiah rose to the highest level in almost a month on optimism this week’s global bond sale will boost the nation’s foreign-exchange reserves. Government bonds advanced.

The country raised $3 billion from the offering and sold 10-year notes at 3.50 percent, a record low for non-Islamic U.S. currency securities, according to a statement on the finance ministry’s website. The cost to insure Indonesian bonds against default fell to a two-week low. Foreign reserves fell $7.98 billion last quarter to $104.8 billion, the biggest drop since Bloomberg began compiling the figures in 1998.

“The large volume and low yields achieved at the sale improved investor confidence in Indonesia’s assets,” said Mika Martumpal, a currency analyst at PT Bank CIMB Niaga in Jakarta. “It will also help increase foreign reserves and give Bank Indonesia more room to move in guarding the currency.”

The rupiah advanced 0.3 percent to 9,695 per dollar as of 3:35 p.m. in Jakarta and reached 9,690 earlier, the highest level since March 13, prices from local banks compiled by Bloomberg show. It traded at a 0.05 percent premium to the one-month non-deliverable forwards, which gained 0.4 percent to 9,700, data compiled by Bloomberg show.

A daily fixing used to settle the derivatives was set at 9,694 by the Association of Banks in Singapore, from 9,743 yesterday. One-month implied volatility for the rupiah, a measure of expected moves in the exchange rate used to price options, fell eight basis points to 5.94 percent.

Five-year credit-default swaps tied to the nation’s debt dropped four basis points in New York yesterday to 150 basis points, the lowest since March 25, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The yield on the 5.625 percent rupiah bonds due May 2023 dropped three basis points, or 0.03 percentage point, to 5.62 percent, according to prices from the Inter Dealer Market Association.

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