Indonesia’s rupiah rose to the strongest level in seven years as overseas investors boosted holdings of local assets amid accelerating economic growth. Benchmark bonds advanced. The Jakarta Composite Index (JCI) climbed to a record after exchange data showed global funds bought $525 million more shares than they sold this month. Indonesia has a “more than 50 percent chance” of winning a sovereign upgrade in the next 12 months to 18 months, Fitch Ratings said on July 19. The Dollar Index dropped to a two-month low as U.S. lawmakers try to come up with a plan to increase the debt ceiling and avoid a default. “Capital inflows into Indonesia will be supported by positive sentiment including a rating upgrade this year or early next year,” said Ho Woei Chen, a Singapore-based economist at United Overseas Bank Ltd. “It is broad dollar weakness that’s driving Asian currencies.” The rupiah strengthened 0.4 percent to 8,478 per dollar as of 4:43 p.m. in Jakarta, according to data compiled by Bloomberg. It touched 8,476 earlier, the highest level since March 2004. Fitch rates Indonesia BB+, while Standard & Poor’s boosted its rating in April to BB+ from BB, both one step below investment grade. The economy expanded 6.1 percent last year, the fastest pace since 2008. The Dollar Index, which tracks the greenback against currencies of six major trading partners, reached 73.421, its lowest level since May 5. President Barack Obama’s Office of Management and Budget said it “strongly opposes” House Speaker John Boehner’s two- step plan to raise the $14.3 trillion debt ceiling and cut $3 trillion in expenditure, on which the Republican-controlled House is set to vote today before an Aug. 2 deadline. Overseas ownership of Indonesian government bonds rose 25 percent to 243.93 trillion rupiah ($28.8 billion) this year through July 22, according to the debt management office. Ten-year government bonds rose for a second day. The yield on the 8.25 percent note due July 2021 fell 14 basis points to 7.08 percent, according to closing prices from the Inter-Dealer Market Association. To contact the reporter on this story: Suryani Omar in Jakarta at somar6@bloomberg.net To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

Source