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Indonesian Rupiah Trades Near One-Month High on Moody’s Upgrade
January 19, 2012

Indonesian employees wait for the commuter train in the central Jakarta business district on Wednesday night. The rupiah traded near its strongest level in a month on Thursday on optimism a credit-rating upgrade by Moody’s Investors Service will boost demand for the nation’s assets. (Reuters Photo) Indonesian employees wait for the commuter train in the central Jakarta business district on Wednesday night. The rupiah traded near its strongest level in a month on Thursday on optimism a credit-rating upgrade by Moody’s Investors Service will boost demand for the nation’s assets. (Reuters Photo)
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Indonesia’s rupiah traded near its strongest level in a month on Thursday on optimism a credit-rating upgrade by Moody’s Investors Service will boost demand for the nation’s assets.

Moody’s raised the country’s foreign- and local-currency ranking by one level to Baa3 yesterday, its lowest investment grade, prompting central bank Deputy Governor Hartadi Sarwono to say that Indonesia may become a haven nation for investors. Global funds bought $66 million more Indonesian shares than they sold yesterday, according to exchange data.

“The stamp of approval by Moody’s shows Indonesia’s economic fundamentals are in place,” said Radhika Rao, an economist at Forecast Pte in Singapore. “The move is positive for bonds and the currency as it opens up the country to overseas funds.”

The rupiah traded at 9,068 per dollar as of 8:40 a.m. in Jakarta, compared with 9,069 yesterday, according to prices from local banks compiled by Bloomberg. The currency reached 9,045 earlier and touched 9,028 yesterday, the strongest level since Dec. 23.

Fitch Ratings brought Indonesia back to investment grade last month after 14 years of junk ratings, citing “strong and resilient growth” in Southeast Asia’s biggest economy.

The yield on the government’s 7 percent bonds due May 2022 fell 14 basis points, or 0.14 percentage point, to 5.97 percent yesterday, according to the Inter-Dealer Market Association.

Bloomberg