January 12, 2015
Indonesia’s rupiah rose the most this year after a drop in U.S. wages spurred speculation the Federal Reserve will delay a plan to start raising interest rates.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, reached a one-week low today, after a report showed average hourly earnings in the U.S. declined the most in data going back to 2006. Indonesia raised $4 billion from a sovereign dollar bond sale last week with investors submitting bids for 4.8 times the amount offered.
“The wage growth was disappointing and there’s concern it will delay the start of the Fed rate-hike cycle,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “Indonesia’s successful bond sale will help support the rupiah.”
The rupiah rose 0.5 percent, the most since Dec. 31, to close at 12,598 a dollar, prices from local banks show. One-month non-deliverable forwards declined 0.2 percent to 12,660, data compiled by Bloomberg show. Bank Indonesia set a fixing used to settle the contracts at 12,568, from 12,640 on Jan. 9.
The central bank will hold its benchmark interest rate at 7.75 percent on Jan. 15, according to 13 of 14 economists surveyed by Bloomberg. One forecasts an increase to 8 percent.
The nation’s local-currency bonds rose, pushing the yield on the notes due September 2025 down eight basis points, or 0.08 percentage point, to 7.84 percent, prices from the Inter Dealer Market Association show. That’s the lowest level for a benchmark 10-year security since Jan. 1.
original source: http://www.businessweek.com/news/2015-01-11/rupiah-strengthens-most-in-three-weeks-after-u-dot-s-dot-wages-decline