Rupiah's Longest Winning Run Since 2010 Worries Economy Minister

Indonesia’s rupiah rose for a 13th day in its longest rally in six years even after a senior minister expressed concern at the pace of gains.

The currency advanced 0.6 percent to 13,052 a dollar as of 10:39 a.m. in Jakarta, according to prices from local banks. It touched 12,978 earlier, the strongest since April 30, 2015. The rupiah’s 5.6 percent advance this year is the best among 24 emerging markets tracked by Bloomberg after Brazil’s real.

The government doesn’t want the rupiah to strengthen above its fundamentals, Coordinating Minister of the Economy Darmin Nasution said on Friday amid a slump in exports that’s persisted for 16 months through January. Foreign funds have pumped $2.7 billion into rupiah sovereign bonds and stocks this year as inflation slowed, economic growth picked up and the government opened up more areas of the economy for overseas investment. Indonesia has run its smallest current-account deficit in the first quarter over the past two years.

“The combination of strong inflows and still seasonal low demand for the U.S. dollar creates this sustained appreciation of the rupiah," said Leo Rinaldy, an economist at PT Mandiri Sekuritas in Jakarta. “The strengthening will be an opportunity for the central bank to build up its foreign-Exchange reserves."

Bank Indonesia is due to report reserves data for February later on Monday. The stockpile has shrunk in 10 of the last 11 months, declining by 3.6 percent to $102.1 billion in January.

Sovereign bonds rallied for a fourth day, pushing the 10-year Yield down 13 basis points to a 10-month low of 7.79 percent, Inter Dealer Market Association prices show. The two-year yield fell 16 basis points to 7.53 percent.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net. To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net, Andrew Janes, Naoto Hosoda

By: Lilian Karunungan

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