Indonesia sells $3 billion bonds to plug deficit
Indonesia has just sold 3 billion U.S. dollars of bonds in medium-term notes, which is the country’s largest ever dollar-denominated bond sale, to help plug the growing state budget deficit, the Jakarta Post daily reported on Saturday. The Indonesian Finance Minister Sri Mulyani said on Friday that the country had sold 2 billion dollars of ten-year bonds, with a yield of 11.75 percent; and 1 billion dollars of five-year bonds, with a yield of 10.5 percent.
The yields of ten-year notes and five-year notes are 8.759 percentage points and 8.474 points respectively, higher than similar-maturity U.S. Treasuries. According to the Ministry’s head of fiscal policy Anggito Abimanyu, the bonds will help cover the budget deficit of 139.5 trillion rupiah (about 11.625 billion dollars), equal to 2.5 percent of Indonesia’s gross domestic product (GDP), and increase forex reserves.
“Our trade surplus has declined; while there has been a capital outflow from our investment portfolio. The source from where we can maintain our forex reserves is foreign debts,” Anggito said, adding that the yields were within the government’s “benchmark”.
Rupee up against dollar in early trade
After remaining weak for two straight sessions, the Indian rupee appreciated by 14 paise against the US currency in early trade on Wednesday on expectations of firm opening of the domestic bourses on the back of recovery in the Asian qeuities, raising hopes of fresh capital inflows by foreign funds.
At the Interbank Foreign Exchange (Forex) market the domestic unit was quoted higher at 49.73 a dollar, a rise of 14 paise over the previous close of 49.87/88.
Forex dealers said hopes of fresh capital inflow from foreign funds in the domestic stock market which may rise in line with other Asian bourses such as Hang Seng and Nikkei supported the Indian rupee.
Also, some dollar selling by banks and exporters at higher levels helped the domestic currency to edge higher. Japan’s Nikkei was up 1.87 per cent, while Hong Kong’s Hang Seng index gained 2.49 per cent in early trade on Wednesday.
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