By Lilian Karunungan
Feb. 3 (Bloomberg) -- Indonesia’s rupiah rose for the first time in four days after the central bank said yesterday that it may use bilateral swap agreements to help boost the currency. Bonds gained.
The rupiah has declined 6.9 percent so far this year, the second-biggest loser among Asia’s 10 most-active currencies outside Japan, as a deepening global recession eroded demand for riskier assets. Bank Indonesia is concerned about the currency’s slide, said Benny Santoso at PT Bank Rakyat.
“BI has promised they will still be in the market,” said Santoso, treasury manager in Jakarta at the nation’s second- largest bank. “They’re pushing the rupiah to be below 12,000.”
The rupiah rose 0.3 percent to 11,713 per dollar as of 1:52 p.m. in Jakarta, according to data compiled by Bloomberg. The currency, which yesterday touched 12,000, the lowest level since Dec. 5, may trade between 11,500 and 12,000 today, Santoso forecast.
The central bank will sign a currency swap agreement with Japan this month for “additional ammunition from outside our foreign-exchange reserves,” Governor Boediono told reporters in Jakarta yesterday, without providing details.
“Bank Indonesia is threatening to use bilateral foreign- exchange swap lines to help support the rupiah, but this won’t do anything but smooth the moves,” Win Thin, a senior foreign- exchange strategist at Brown Brothers Harriman & Co. in New York, wrote in a note to clients yesterday.
The currency will fall to 12,188, Thin predicted, without providing a timeframe.
Rate Cut
Non-deliverable forwards contracts signal traders are betting the rupiah will weaken to 12,380 per dollar in three months, compared with odds yesterday for a rate of 12,625. Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.
Central banks intervene by arranging purchases or sales of currencies to influence an exchange rate. Indonesia’s foreign- exchange reserves fell to $51.64 billion in December from $57.11 billion in late September, a sign that Bank Indonesia may have been buying rupiah.
Five-year government bonds rose for the fifth day in six on speculation the central bank will reduce its benchmark interest rate for a third straight month tomorrow to stimulate economic growth.
The yield on the 11.25 percent note due May 2014 dropped 8 basis points, or 0.08 percentage point, to 11.18 percent, according to midday prices at the Inter Dealer Market Association. The price advanced 0.31, or 3,100 rupiah per 1 million rupiah face amount, to 100.233.
Helmi Arman, a bond analyst at PT Bank Danamon in Jakarta, forecasts the five-year bond will outperform, with the yield falling to 10.25 percent by year-end for a return of 13.5 percent.
The central bank will lower its benchmark interest rate by 50 basis points to 8.25 percent tomorrow, according to 20 of 23 economists in a Bloomberg News survey.
To contact the reporter on this story:
Lilian Karunungan in Singapore at
lkarunungan@bloomberg.net.
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