Indonesia’s Rupiah Headed for Weekly Gain on Election Optimism

(Bloomberg) -- Indonesia’s rupiah was headed for its biggest weekly gain of the year as optimism President Susilo Bambang Yudhoyono will be re-elected bolsters confidence in the nation’s assets.The rupiah is the only gainer this year among Asia’s 10 most-traded currencies after Yudhoyono, who plans to stand for re-election in July, won the support of more than half of respondents in a poll following parliamentary elections last week. Indonesia yesterday raised $650 million from its first- ever international sale of Islamic dollar bonds, attracting orders for more than six times the debt on offer.

The rupiah surged 5.5 percent this week to 10,720 per dollar as of 10:08 a.m. in Jakarta, according to data compiled by Bloomberg. The currency, which rose 0.1 percent today, has gained 1.7 percent this year. It yesterday reached a four-month high of 10,660.Foreign investors bought more Indonesian stocks than they sold on each of the last four trading days.The MSCI Asia-Pacific Index of shares rose 1.4 percent today as earnings from JPMorgan Chase & Co. and falling U.S. jobless claims heightened speculation a global recession is easing. The Jakarta Composite Index of shares climbed 0.4 percent, set for an 11 percent weekly gain, its biggest advance since August 2007.

Re-Election Hopes
Non-deliverable forwards contracts signal traders have pared bets on how far the rupiah will fall in a month, predicting a drop of 0.5 percent to 10,765 per dollar, after indicating a rate of 11,475 last week. Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.Yudhoyono was favored by 53 percent of 4,200 people who cast their ballots in the April 9 contest, the Indonesian Survey Institute’s exit-survey said yesterday. A re-election of Yudhoyono would enable him to push through with policies aimed at reviving economic growth.Economic growth will accelerate to 5 percent next year from as much as 4.5 percent in 2009, Finance Minister Sri Mulyani Indrawati predicted this week.