The currency is up almost 5 percent in March, set to snap a two-month loss, as the country’s Jakarta Composite index of shares extended a rally. Inflows into emerging-market equities climbed for a second week, totaling a net $350 million in the period to March 18, according to EPFR Global, a research company based in Cambridge, Massachusetts.
“The positive sentiment across Asia would benefit the currency,” said Euben Paracuelles, an economist in Singapore at Royal Bank of Scotland Plc. “Equity markets are rallying. That’s going to benefit the Jakarta index and it’s positive for the rupiah, with foreigners coming in and supporting stocks.”
The rupiah strengthened 1 percent to 11,450 per dollar as of
9:54 a.m. in Jakarta, according to data compiled by Bloomberg.
The currency reached 11,365, the highest level since Feb. 2.
The rupiah is the second-biggest gainer this month among Asia’s 10 most-active currencies outside of Japan as overseas investors bought more Indonesian stocks then they sold on 11 out of the last 12 trading days.
The MSCI Asia-Pacific Index of shares rose for a second day, climbing 1.8 percent, after the U.S. Treasury unveiled a plan to remove $1 trillion of bad assets from the financial system and restore lending. The Jakarta Composite index gained 1.2 percent, a fifth day of gains, the longest stretch since November.
Non-deliverable forwards contracts show traders have pared bets on how far the rupiah will depreciate in one month, predicting a decline of 0.2 percent to 11,473 a dollar compared with expectations at the start of March for a rate of 12,588.
Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.
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--Editors: Simon Harvey, Sam Nagarajan
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