[SINGAPORE] Drawn by the lure of some of Asia's best shopping and buoyed by a resurgent rupiah, 20-something Indonesian Dewi Lestari was ready to spend when she set foot in Singapore for the first time this month.
"The exchange rate is pretty good and Singapore's a shopping paradise," said Lestari, an administrative assistant at a car workshop, as she arrived at the ferry terminal after flying to Batam from her home in Jakarta.
"That's the only reason why I'm here."
The rupiah has surged 9.6 per cent against the US dollar over the past six months, second only to Malaysia's ringgit among emerging markets, as slowing inflation and a nascent commodity-price recovery lured money to the nation's assets.
HSBC Holdings Plc raised its year-end forecast for the rupiah by 7.4 per cent this month, saying the worst is over for Southeast Asian currencies as relatively high yields and a more dovish Federal Reserve ensure demand for the region's assets.
"The rupiah has done really well this year and it makes things look cheaper elsewhere for Indonesians," said Nizam Idris, head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd in Singapore.
"The currency will find support from decent yields and bottoming commodity prices."
Macquarie, the second-most accurate forecaster for emerging-market Asian currencies in the latest Bloomberg rankings, strengthened its end-June projection for the rupiah to 12,600 a dollar this month, implying a 6.1 per cent gain from its trading level of 13,370 as of 8.27 am in Jakarta on Wednesday.
The window could be closing for Indonesian shoppers though, with the median estimate of analysts surveyed by Bloomberg showing a drop to 13,950 by the end of the year.
While the rising rupiah is good for Indonesian holidaymakers, it inflates the cost of the nation's exports and makes imports more affordable, disrupting efforts to rein in the current-account deficit.
Bank Indonesia Governor Agus Martowardojo said last week the central bank doesn't want the currency to become too strong, and a resurgent rupiah will also make it tougher for President Joko Widodo to achieve his goal of doubling tourist arrivals by 2020.
"They need to sound upbeat about the currency because they do want investors to be confident about the economy, but they don't want to overdo it because they don't want the currency to be overvalued," said Joey Chew, an Asian currency strategist at HSBC in Hong Kong, who raised her forecast to 13,500 a dollar from 14,500.
"It's a fine balance. We are at a stage where there is no need for them to be too worried from a competitiveness point of view."
Indonesian arrivals in Singapore rose 5.4 per cent in January from a year earlier, the biggest increase since July 2014, according to figures from the Singapore Tourism Board.
That came after a 9.7 per cent drop in 2015, the largest decline since 2008. Some 248,943 Indonesians went to the city-state in January.
China and Australia were the only other countries that came close with 228,100 and 116,539 arrivals, respectively.
Indonesian economic growth quickened to 5.04 per cent last quarter, the fastest in a year, driven by increased public spending on infrastructure.
A Bloomberg gauge of raw-material prices has rallied 8.8 per cent from a 17-year low in January, while the Jakarta Composite Index has risen 13 per cent in six months in the best performance in Asia.
The rupiah gained 4.5 per cent against the Singapore dollar in six months, the second-best developing-nation performance.
At the Paragon Mall on Singapore's premier Orchard Road shopping strip, Andy Susanto, who runs a manufacturing and trading company in Jakarta, said the strengthening rupiah and improving economy are encouraging Indonesians like himself to shop in the city-state, where items were cheaper because of import taxes on luxury goods at home.
A medium-sized Capucines handbag was selling for S$6,550 at a Louis Vuitton store in Singapore on Tuesday, around 20 per cent cheaper than in Jakarta.
The rupiah has benefited from 82.84 trillion rupiah (S$8.44 billion) of inflows into Indonesia's local-currency sovereign bonds since the end of September as inflation slowed from 6.83 per cent to 4.42 per cent and Bank Indonesia cut its benchmark rate three times in a row this year.
The nation's 10-year notes yield 7.86 per cent, the highest among Asia's emerging markets.
The recent recovery comes after the currency plunged 34 per cent against the greenback in the four years through 2015 as commodity prices tumbled and the Fed unwound its stimulus program.
Affendi Heru Pranoto, a businessman from Solo in Central Java, said the weak rupiah meant he'd opted to spend most of his holidays in Indonesia in recent years.
As the currency had clawed back some of its losses, he'd decided to take the family overseas for Easter. His wife found it cheaper to buy children's clothes at the Mothercare outlet in the Paragon Mall than at home, he said.
"Compared to five years ago, it's still relatively expensive to go abroad," said Pranoto as he ran after his toddler at a playground in the mall.
"But the rupiah's recovery has helped. That's why we're in Singapore."