Indonesian bonds drop on rate concern<\/p>\n
Bloomberg, Kuala Lumpur<\/p>\n
Indonesia's rupiah-denominated bonds fell, the biggest
\nfluctuation of any government debt market on Monday, on concern
\nthe central bank will keep raising interest rates this year to
\ncurb inflation.<\/p>\n
Consumer prices in Southeast Asia's largest economy probably
\nrose 13.1 percent in October from a year ago, according to the
\nmedian forecast of 12 economists in a Bloomberg New survey.<\/p>\n
The government is scheduled to report the figure tomorrow.
\nPrices rose 9.1 percent in September.<\/p>\n
\"Bond yields haven't fully reflected concern about inflation
\nrunning at 13.5 to 14 percent,\" said Gautama Adidharma, head of
\nfixed-income sales at Trimegah Securities in Jakarta.<\/p>\n
\"We are asking our clients to hold back purchases until the
\nsecond quarter next year.\"<\/p>\n
The yield on the 12.25 percent bond due in July 2007 rose 36
\nbasis points, or 0.36 percentage point, to 13.93 percent as of
\n3:50 p.m. in Jakarta, according to prices supplied by Deutsche
\nBank AG.<\/p>\n
The price fell 0.5 percent, or Rp 5,000 per Rp. 1 million face
\namount, to Rp 97.50.<\/p>\n
Bank Indonesia, the central bank, raised its policy rate,
\nwhich it uses to guide yields at its bill sales, by 1 percentage
\npoint to 11 percent on Oct. 4, taking it up from 8.5 percent at
\nthe start of August.<\/p>\n
The central bank may increase the rate to 12 percent as soon
\nas tomorrow after the inflation report, Adidharma said.<\/p>\n
\"There's a possibility we'll increase the interest rate,\" Bank
\nIndonesia Governor Burhanuddin Abdullah said in a speech in
\nJakarta on Oct. 24.<\/p>\n
\"We are keeping tight monetary policy.\"<\/p>\n
September's inflation rate was the highest in 33 months.<\/p>\n
President Susilo Bambang Yudhoyono's government on Oct. 1
\ndoubled retail fuel prices to cut subsidies, save money and keep
\nthe budget deficit at about 0.9 percent of gross domestic
\nproduct.<\/p>\n
The world's biggest movers are based on changes in price or
\nyield and are screened for the size of the market and amount of
\ndaily trading.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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