JAKARTA (TheInsiderStories) – Local markets still weary on the external pressures showed by the performance of Rupiah and the Jakarta Composite Index (JCI). The same condition is also experienced by the global market.
The catalyst sentiment from domestic market for today is expecting from Bank Indonesia (BI) and OPEC meeting in Vienna, Swiss. Indonesian central bank this afternoon will announces their monetary stance on the current situation.
BI itself has sent a signal that another hike of the benchmark rate is on the table at the next monetary meeting next week. Last month, the central bank’s board of governor raised interest rates for the first time in four years to stem a depreciation of the currency.
The latest decision brought the BI seven-day Reverse Repo rate (BI-7DRRR) to 4.75 percent, while the lending facility rate was raised to 5.50 percent and the deposit facility rate to 4.00 percent.
Yesterday, Indonesian Rupiah slipped 1.22 percent to the level of Rp14.102 per U.S dollar, making the currency as the worst performing in Asia. Other Asian currencies also declined against the greenback. The U.S Dollar gained 0.30 percent against the Japanese Yen, 0.31 percent against China Yuan, and 0.04 percent against the South Korean Won.
In line with the Rupiah, the JCI closed down 1.05 percent or 61.71 points to 5,822.33 on Thursday (21/06). Seven out of nine indexes of JCI ended in the red zone, led by various industry sectors (-3.06 percent) and property (-1.85 percent).
Wall Street also is still under pressure. Yesterday, Dow Jones Industrial Average fell 0.80 percent to 24,461.70, the S & P 500 index was down 0.63 percent to 2,749.76 and Nasdaq Composite shed 0.88 percent to 7,712.95. The stock market is depressed after a sales tax rule that suppresses online retailers. Under the tax rules set by the Supreme Court, online retailers must pay sales tax.
On the other hand, the Dow Jones index fell again on the eighth day in a row. The energy sector became the sector with the biggest decline. The sector is depressed ahead of an OPEC meeting expected to raise output.
Crude oil prices fell in late trading on Thursday, as Saudi Arabia moved in with some of its efforts to boost OPEC output. The West Texas Intermediate (WTI) oil price for August 2018 contract closed down 17 cents at $ 65.54 a barrel on the New York Mercantile Exchange. Total volume traded about 23 percent above the 100 day average.
Brent oil for August delivery shed $1.69 and ended at $73.05 a barrel on the London-based ICE Futures Europe exchange. This global benchmark crude traded at a premium of $7.51 against WTI.
Oil prices in London fell 2.3 percent after Saudi Arabia’s Energy Minister Khalid al-Falih said that OPEC and its allies need to release more oil to the market due to increasing demand. Based on report, Saudi Arabia has proposed that OPEC increase production by 600,000 barrels per day.
The increase in quotas of countries that floated during talks in Vienna, could reach 1 million to 1.8 million barrels per day. It is not clear how much will be realized in actual production because not all members can reach their quota.
However, the push to increase supplies by Saudi Arabia and non-OPEC members Russia has been opposed by producers such as Venezuela, and Iran. Meanwhile, Russian Energy Minister Alexander Novak said any increase in oil production should be divided equally and oil prices are at an appropriate level.
Meanwhile, gold prices are still depressed this week. This morning, the price of gold for delivery in August 2018 on the Commodity Exchange is at the lowest level this year at $1,269.90 per troy ounce from yesterday’s position at $1,270.50 per troy ounce.
In four consecutive days of decline, the price of gold fell 0.80 percent. In the spot market, gold prices had touched $1,260 per troy ounce before narrowing the decline.
Hows about today? We assessed the composite stock price index and Rupiah could rebound today on the positive sentiment from the domestic side. The opportunities to resume the flow of foreign funds are still expected to boost the JCI and local currency in the future. In the mean time, the OPEC meeting also will drive crude oil price if comes out to cut the output.