While most emerging Asian currencies fell, the Indonesian rupiah exchange rate appreciated 0.08 percent to IDR 11,523 per US dollar based on the Bloomberg Dollar Index on Monday (12/05). The depreciating Chinese yuan, after its central bank set the midrate at its lowest level in eight months, put pressure on other Asian currencies. Today, Indonesia's Finance Ministry sold IDR 10 trillion rupiah (USD $867 million) of bonds, higher than the indicative target of IDR 8 trillion rupiah. Meanwhile, Indonesia’s two-year bonds gained.
Two-year bonds gained because Indonesia's current account deficit, which eased further in Q1-2014, causes speculation that Bank Indonesia will not raise borrowing costs again. In 2013, the central bank had raised its benchmark interest rate (BI rate) gradually from 5.75 percent in June 2013 to 7.50 percent in November 2013 in order to combat high inflation after the government increased prices of subsidized fuels in June 2013.
Indonesia's foreign exchange reserves, which rose to USD $105.6 billion at end-April 2014, also provided a positive market sentiment for the rupiah.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.23 percent to IDR 11,536 against the US dollar on Monday (12/05).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia