Indonesia’s rupiah traded near a four-week high early on Wednesday and government bonds gained as speculation central banks will ease monetary policy in the world’s biggest economies spurred demand for emerging-market assets.
Global funds bought $94 million more local shares than they sold in the last two days and added 590 billion rupiah ($63 million) to their government bond holdings on July 2, data show.
The MSCI Asia-Pacific Index rallied to near a two-month high as economists forecast the European Central Bank will reduce borrowing costs tomorrow.
China may cut banks’ reserve- requirement ratios three more times in 2012, Shanghai Securities News reported on its website, citing a report released by the China Banking Association today.
“We might be seeing foreigners return to the stock market, with slower inflows into the bond market, as optimism returns,” said Billie Fuliangsahar, the Jakarta-based head of treasury at PT Rabobank International Indonesia. “There is still some demand for dollars left over from last month, with corporates needing to make payments, so the moves may be limited.”
The rupiah strengthened 0.1 percent to 9,355 per dollar as of 9:28 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency touched 9,340 earlier, the highest since June 7.
One-month implied volatility, which measures exchange-rate swings used to price options, declined 25 basis points, or 0.25 percentage point, to 8.25 percent on Wednesday.
The yield on the government’s benchmark 10-year bonds fell one basis point to 6.05 percent, the lowest level since May 4, according to data compiled by Bloomberg.