Bisnis Indonesia - Bisnis.com

JAKARTA: Indonesia’s rupiah advanced the most in two weeks after China pledged to boost its economy and world leaders sought to keep Greece in the euro zone.

Meanwhile, government bonds (SUN) were steady.

The Bloomberg-JPMorgan Asia Dollar Index snapped six days of losses after China’s Premier Wen Jiabao said on May 20 he will give more priority to maintaining growth. Leaders of the Group of Eight nations pushed for Greece to stay in the euro area on May 19.

Bank Indonesia continues to enter the rupiah market and will use its ammunition carefully, Deputy Governor Hartadi Sarwono said last week, adding that the central bank doesn’t want the rupiah to weaken too fast.

"There is relief in the market from all the news, which gives room for the rupiah to strengthen," said Nurul Eti Nurbaeti, the head of treasury research at PT Bank Negara Indonesia in Jakarta.
"We expect it to be temporary, however, as it is not based on fundamentals."

The rupiah gained 0.9% to 9,275 per dollar as of 9:10 a.m. in Jakarta, the most since May 7, according to prices from local banks compiled by Bloomberg. The currency reached 9,396 on May 16, the weakest level since February 2010.

One-month implied volatility, which measures exchange-rate swings used to price options, held at 10 percent for a third day. The measure rose 450 basis points, or 4.5 percentage points, this month.

The yield on the government’s benchmark 10-year bonds was unchanged today at 6.61%, the highest since December, after climbing 64 basis points this month, data compiled by Bloomberg show. (Bloomberg/T03/TW)