The rupiah will climb 7% by year-end as the central bank's reduction of interest rates to 9.25% attracts global equity funds, said HSBC Holdings Plc.<\/p>\n
Stock buying by overseas investors will outweigh sales by bondholders as lower yields reduce the appeal of fixed-income assets, said Richard Yetsenga, a currency strategist at HSBC in Hong Kong. The extra yield investors receive for buying 10-year rupiah-denominated bonds over similar-dated US Treasuries has dropped by more than half in the past 18 months.<\/p>\n
\u201cThe currency is not reliant on fixed-income flows as now, equity flows have become more important,\u201d he said Tuesday (6\/2\/07), according to Bloomberg News. \u201cRate cuts are going to be good for equity inflows as they'll be good for growth.\u201d<\/p>\n
A record trade surplus also will boost the currency, said Yetsenga. The gap between imports and exports widened to an all-time high $4.56 billion in December, a government report showed February 1.<\/p>\n
\u201cThe surplus has reached such a level that there will be a lot of flows back from exports, even if all the profits earned are not returned into rupiah,\u201d he said.<\/p>\n
HSBC sees Bank Indonesia (BI) reducing its benchmark by another 25 basis points this year from the current 9.25%, spurring economic growth.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-to-rise-7-hsbc-1171391268", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }