Indonesian Rupiah Trades Near Six-Week High on U.S. Recovery

Tuesday, 4 January 2011

The Jakarta Globe

Indonesia’s rupiah traded near a six- week high as a U.S. manufacturing report boosted optimism that the global economic recovery is intact.

The Institute for Supply Management said yesterday its factory index rose to 57 in December from 56.6, the fastest pace in seven months. Indonesia’s exports may rise 12 percent to $168 billion this year, Coordinating Minister for the Economy Hatta Rajasa said in Jakarta yesterday.

“A better global recovery is helping Asian currencies, including the rupiah,” said Philip Wee, a Singapore-based currency economist at DBS Group Holdings Ltd. "There’s more risk appetite after the better U.S. data."

The currency traded at 8,978 to the dollar as at 8:48 a.m. in Jakarta, unchanged from yesterday. The rupiah earlier reached 8,940 per dollar, the strongest level since Nov. 23.

Indonesia’s exports to the U.S., its third-biggest export market, were $1.1 billion in November, the largest after China and Japan, according to data from the Central Bureau Statistics.

Foreigners boosted their holdings of Indonesian government debt by 81 percent last year to 195.3 trillion rupiah ($21.8 billion) as of Dec. 30, finance ministry data shows. The central bank may hold interest rates steady at its first meeting of this year tomorrow.