Indonesia’s rupiah rose the most in three weeks and shares advanced after President Joko Widodo raised subsidized fuel prices, freeing up funds for capital spending in an economy growing at the slowest pace since 2009.
The price of gasoline was increased by 2,000 rupiah ($0.16) a liter to 8,500 rupiah and that of diesel to 7,500 rupiah a liter from 5,500 rupiah, Widodo said at a press conference late yesterday in Jakarta. Prior to the increase, Indonesia had earmarked 276 trillion rupiah for fuel subsidies in the 2015 budget, or 13.5 percent of expenditure.
The rupiah strengthened 0.6 percent, the most since Oct. 29, to 12,138 per dollar as of 9:20 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. Twelve-month non-deliverable forwards traded offshore rose 0.7 percent to 12,167, 0.2 percent weaker than the spot rate. Bank Indonesia set a fixing used to settle the contracts at 12,193 yesterday and will publish today’s rate at 10 a.m. local time.
“The freed-up funds can be potentially used in other avenues, particularly infrastructure spending and capital works, which can really boost the longer-term economic growth outlook,” said Jonathan Cavenagh, a foreign-exchange strategist at Westpac Banking Corp. in Singapore. Speculation that Bank Indonesia will raise interest rates at a special meeting today is also supporting the currency, he said.
The central bank will hold an unscheduled monetary policy review today, spokesman Peter Jacobs said. The benchmark interest rate has been held at 7.5 percent since November 2013 following 1.75 percentage points of increases last year.
Source: Bloomberg (18 Nov 2014)
No comments:
Post a Comment