Indonesia’s rupiah reached the highest level in almost two weeks and government bonds gained after European leaders reached a deal on aid for Greece, supporting demand for higher-yielding assets.
Overseas investors boosted their holdings of Indonesia’s local-currency government debt by Rp 14.03 trillion ($1.5 billion) this month to a record Rp 264.36 trillion as of Nov. 21, finance ministry data show. The Southeast Asian nation’s 10-year bond yield of 5.43 percent compares with 1.67 percent for similar-maturity US Treasuries.
“The rupiah is driven by temporary positive sentiment from Europe,” said Billie Fuliangsahar, the head of treasury at Bank Rabobank International Indonesia in Jakarta. “Yield- seeking capital flows into local bonds have been strong and will continue, although at a slower pace.”
The rupiah advanced 0.1 percent to 9,593 per dollar as of 9:17 a.m. in Jakarta, prices from local banks compiled by Bloomberg show. It touched 9,583 earlier, the strongest level since Nov. 14. One-month implied volatility, a measure of expected moves in exchange rates used to price options, held at a four-year low of 4.40 percent.
European finance ministers agreed to reduce Greece’s interest rates and allow it more time to repay its rescue loans, Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels today. A reduction in the nation’s debt was not discussed, German Finance Minister Wolfgang Schaeuble said.
The yield on Indonesia’s 10 percent bonds maturing in July 2017 fell one basis point, or 0.01 percentage point, to 5.03 percent, the lowest level since Nov. 19, prices from the Inter Dealer Market Association show.