2012.06.06 10:25:31 Bank Indonesia: To Continue Supporting Rupiah Government Bonds Via 'Measured' Purchases

By I Made Sentana and Andreas Ismar JAKARTA--Bank Indonesia will continue to support rupiah-denominated government bonds by making 'measured' purchases as heightened risk aversion prompts overseas investors to pull funds from emerging market assets, a senior official at the central bank said Wednesday. BI has been buying government bonds partly to keep the rupiah stable, but it was less active in the bond market in May compared with during the previous bout of risk aversion in September, bond dealers said. BI Director of Monetary Management Hendar said at a forum that the central bank is committed to supporting rupiah government bonds. "Bank Indonesia will continue to intervene in the bond market in a measured manner," said Mr. Hendar, who, like many Indonesians, uses only one name. The benchmark 10-year government bond yield rose 57 basis points in May, a month in which overseas investors sold a net 4.4 trillion rupiah ($466.4 million) worth of rupiah government bonds. At the same time, BI bought a net IDR7.7 trillion, less than the IDR13.0 trillion bought in September. A Jakarta-based dealer said BI may have been less aggressive in its purchases to limit the cost of monetary operations. Earlier Wednesday, BI Deputy Gov. Hartadi Sarwono said foreign currency reserves--the first line of defence against sudden fund outflows--fell to $111.53 billion by the end of May from $116.41 billion at the end of April. Write to I Made Sentana at i-made.sentana@dowjones.com, Andreas Ismar at andreasismar.sandiwan@dowjones.com (END) Dow Jones Newswires June 06, 2012 04:25 ET (08:25 GMT)