Indonesia’s rupiah was little changed Monday on speculation the central bank will intervene to limit gains in the currency that may hurt overseas sales.
The currency on Sept. 13 reached a one-month high of Rp 8,923 versus the greenback before Japan, the biggest buyer of Indonesian exports, two days later bought dollars to weaken the yen from a 15-year high. Bank Indonesia Governor Darmin Nasution said Sept. 17 any purchases of the US currency would aim to “prevent the rupiah’s fluctuations from becoming too big”.
“Bank Indonesia will come in to cap excessive gains in the rupiah to help exports,” said Joanna Tan, a regional economist at Forecast Singapore Pte. The central bank “doesn’t want too volatile movements in the currency. We will continue to see fund inflows into Indonesia as the economic fundamentals are strong.”
The rupiah traded at Rp 8,978 per dollar as of 3:50 p.m. Monday in Jakarta, from Rp 8,975 at the end of last week, according to data compiled by Bloomberg. The currency touched a three-year high of 8,905 on Aug. 3, less than a week after Bank Indonesia Deputy Governor Hartadi Sarwono said policy makers would continue to guard against excessive gains.
Overseas investors pumped US$536 million into Indonesian equities last week, boosting net purchases for the year to $2.2 billion and helping drive the Jakarta Composite index to a record. The measure fell 0.8 percent today.
Global funds increased holdings of the nation’s bonds by 64 percent in 2010 to Rp 176.9 trillion ($19.7 billion) as of Sept. 17, according to the finance ministry’s website. That helped the government’s benchmark bonds to extend last week’s gains, pushing yields to more than a one-month low.
The rate on the 11 percent security due in November 2020 fell one basis point to 7.87 percent Monday, according to midday prices provided by the Inter-Dealer Market Association.
Indonesia’s economy, Southeast Asia’s largest, may expand 6 percent this year, President Susilo Bambang Yudhoyono said Sept. 15. Growth slowed to 4.55 percent in 2009, from 6.1 percent the previous year, official figures show.
Elsewhere, Asian currencies rose, building on three weekly advances, on speculation global funds will boost their holdings of regional assets to profit from the world’s fastest economic growth.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, climbed to a two-year high.
The Philippine peso gained 0.3 percent to 44.055 per dollar and India’s rupee was up 0.4 percent at 45.65 as of 2:53 p.m. in Mumbai. China’s yuan climbed 0.1 percent to 6.7121 and reached 6.7085, its strongest since official and market exchange rates were unified at the end of 1993.
“Strong fundamentals in Asia attract foreign funds to the local stock markets,” said Eric Hsing, a debt trader at First Securities Inc. in Taipei.
“Asian currencies will continue to strengthen.”
Overseas investors have plowed more than $7.5 billion into equities in India, South Korea and Taiwan this month and the MSCI Asia Pacific Index of shares Monday reached its highest level since April. Asia’s developing economies will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund forecast in July.
The yuan strengthened on speculation China will yield to increased political pressure from the US, which is seeking faster appreciation in the currency
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