The Indonesian rupiah rose by the fastest pace since December as investors bet that Jakarta Governor Joko Widodo will win elections this week after his strong showing in the final debate. Local stocks surged.
The rupiah advanced 1.6 percent to trade at 11,699 per dollar by 12:46 p.m. local time, the fastest gain since December 2, 2013. The 1-month non-deliverable forwards in the offshore markets surged 1.1 percent to trade at 11,736 per dollar, which is 0.3 percent lower than the onshore spot rate.
Indonesia is expected to elect a new leader on Wednesday. Mr. Widodo saw his popularity soar after he questioned why beef prices are so high during the Ramadan during a televised debate on Saturday. Widodo’s rival, former military man Prabowo Subianto may lose out in the elections after a former leader of his party Prosperous Justice Party was jailed for 16 years after pocketing bribes from a meat importer.
“The market was probably bracing for a Prabowo win, so this is a relief rally,” Irene Cheung, a strategist at Australia & New Zealand Banking Group Ltd in Singapore spoke to Bloomberg. “Jokowi’s record when it comes to corruption seems better compared to Prabowo, so the debate reflected well on him.”
The Jakarta Composite index of stocks surged 1 percent as it looked to post its strongest advance since June 10.
The rupee’s one-month volatility, which monitors the expected shifts in the exchange rate used to assign price to options, rose 7 basis points to steady at 11.76 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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