MO:Rupiah gains to 19-week high as Jokowi candidacy lures inflows
JAKARTA, March 17 — Indonesia’s rupiah rose to a 19- week high after foreign funds pumped money into local stocks as Jakarta Governor Joko Widodo announced he would run in July’s presidential election.
Overseas investors added US$656 million (RM2.1 billion) to holdings of Indonesian equities, the most since May, on March 14 as the Indonesian Democratic Party of Struggle (PDI-P) said Widodo, known locally as Jokowi, would be its candidate. That helped push the Jakarta Composite index up 3.2 per cent and into bull- market territory. A Jokowi administration would probably boost spending on infrastructure and public welfare, according to a report last month from CIMB Group Holdings Bhd.
The rupiah strengthened 0.6 per cent to close at 11,293 per dollar, prices from local banks show. It reached 11,254 earlier, the highest level since October 31. In the offshore market, one- month non-deliverable forwards advanced 0.1 per cent to 11,329 per dollar, trading 0.3 per cent weaker than the onshore rate, data compiled by Bloomberg show.
“Foreign funds are rushing in after the Jokowi news,” said Putra Perdana Akbar, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta. “The rupiah strengthening too fast could weigh on exports, so that could become a concern, but strong inflows may continue to support the gains.”
Jokowi led in a January opinion poll by the Indonesian Survey Circle, attracting 35.6 per cent of support, followed by 20.1 per cent for Aburizal Bakrie of the Golkar party.
Bonds rally
The JCI has risen more than 20 per cent from an August 27 low, the percentage of increase commonly defined as a bull market. PT CIMB Securities Indonesia, the nation’s second-largest brokerage, sees the JCI gaining a further 7 per cent this year on the Jokowi nomination and possible presidency, analyst Erwan Teguh in Jakarta said after the market closed on March 14.
A fixing used to settle the rupiah forwards was set at 11,239 per dollar today, from 11,423 on March 14, by the Association of Banks in Singapore. Bank Indonesia’s onshore rate was placed at 11,272 today, from 11,421 last week.
One-month implied volatility, a measure of expected moves in the rupiah used to price options, dropped 24 basis points, or 0.24 percentage point, to 10.56 per cent.
The yield on the government’s 8.375 per cent bonds due March 2024 fell three basis points to 7.96 per cent, according to the Inter Dealer Market Association. — Bloomberg
