ASIA LOCAL BONDS-Indonesia yields fall as control fears ease

By Saikat Chatterjee

HONG KONG, Nov 18 (Reuters) - Indonesian government debt yields eased on Wednesday after the central bank played down the immediate threat of curbs on foreign holding of short-term bonds, while a weak rupiah added to the lure of local debt.

Deputy governor Hartadi Sarwono told Reuters that possible curbs on foreign holdings of short-term SBI debt were just one of the options the central bank was studying and currency moves linked to money flows were manageable so far. [ID:nJAK502158].

CONCERNS OVER FOR NOW

Bond yields rose in early trade after Sarwono said late on Tuesday the central bank was considering such controls to curb hot money flows. The remarks pushed the rupiah IDR= down about half a percent against the dollar in early Wednesday trade. [EMRG/FRX]

But government bond yields dipped later in the day following Sarwono's latest comments.

"Unless the curbs becomes a reality it is all speculation and moreover the weakening rupiah made bonds attractive to buy at these levels," said a senior trader at a Jakarta-based bank.

Six-year bond ID6YT=RR yields fell to 9.36 percent, below an intraday peak of 9.42 percent and Tuesday's close of 9.4 percent.

Benchmark five-year bond yields ID5YT=RR were at 9.28 percent in late trading compared to 9.30 percent on Tuesday.