The Indonesian rupiah recorded its biggest gain in five months after the Federal Reserve signaled that it isn’t in a hurry to hike interest rates, a move that pushed up assets in emerging markets.
The rupiah jumped 0.9 percent, its strongest advance since Oct. 17, to end Thursday’s session at 13,045 per dollar in Jakarta, making it Asia’s biggest gainer after the South Korean won. The gain consequently reduced the rupiah’s loss in 2015 to 5.1 percent.
Indonesia’s central bank retained interest rates on Tuesday and promised to strengthen measures to ensure the stability of the rupiah. Bank Indonesia had lowered interest rates in February and told markets it was okay with a weaker currency.
“The rupiah’s been sold off by a lot, so it’s no surprise that it would see a bigger move when the dollar retraces,” Irene Cheung, a Singapore-based currency strategist at Australia & New Zealand Banking Group Ltd., told Bloomberg News. “Bank Indonesia’s decision not to cut rates and comments signaling it will prioritize the currency will lend some near-term support.”
Data obtained from the Inter Dealer Market Association showed that Indonesia’s sovereign bonds that mature in March 2024 rose, reducing the yield 15 basis points to 7.34 percent.
Elsewhere, the Chinese yuan advanced 0.54 percent, its strongest rally since March 2014, to 6.1961 per dollar at the close of trading in Shanghai. This was also prompted by the Federal Reserve’s signal that it won’t rush to increase interest rates soon. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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