Morning Briefing: BI Moves Helped by the Weakening US Dollar Bring Rupiah to Positive Zones

Indonesia's Forex Reserves US$123B in February
Bank Indonesia Headquarters at Central Jakarta - Photo: Special

JAKARTA (TheInsiderStories) – Good morning. Bank Indonesia (BI) moved to hold the key interest rate and to launch domestic non-deliverable forward (DNDF) transactions on Nov. 1, plus the weakening of US dollar against major currencies after six sessions of winning streaks, bring market to the green territory.

Yesterday (24/10), the Rupiah made some gains as the dollar ended lower against major currencies after six sessions of winning streaks. The Rupiah ended at 15,193 per US$1 versus 15,208 per US$1, according to Bank Indonesia’s reference rate.

On Oct. 23, BI hold its reference seven-day reverse repurchase rate (BI-7DRRR) at 5.75 percent to maintain economic stability.  Senior deputy governor Mirza Adityawara stated, the decision has been made is consistent to reduce the current account deficit (CAD) to a safe limit and to maintain the attractiveness of the domestic financial market.

At the press conference, he also announced starting Nov. 1, BI DNDF transactions. A policy that is expected to ease external pressure on the rupiah.

11 banks would be involved in a simulation for DNDF transactions such as PT Bank Mandiri Tbk (IDX: BMRI), PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank Rakyat Indonesia Tbk (IDX: BBRI), PT Bank Central Asia (IDX: BBCA), PT HSBC Bank, PT Maybank Indonesia Tbk (IDX: BNII), PT Deutsche Bank Indonesia, PT Standard Chartered Bank, PT Bank Permata Tbk (IDX: BNLI), PT Bank NISP Tbk (IDX: NISP) and PT Bank UOB Buana Tbk (IDX: BBIA).

The central bank also announced, Indonesia’s external debt at the end of August 2018 amounted to $360.7 billion, consisting of government and central bank external debt of $181.3 billion, as well as private sector, including state-owned enterprises, external debt of $179.4 billion.

It said, Indonesia’s external debt grew at 5.14 percent in annual basis (YoY) and relatively stable compare to previous month’s growth of 5.08 percent (YoY). Indonesia’s external debt growth in August 2018 was influenced by the increasing growth in private external debt amid slowing growth in government and central bank external debt.

But the positive trend not showed at the stock market. The Jakarta Composite Index ended lower, led by disappointing results of state-owned lender Bank Rakyat Indonesia’s nine month financial performance. The index fell 1.5 percent to 5,709 with foreign investors net sold equity worth Rp687 billion ($47.38 million).

BBRI reported a net income of Rp23.5 trillion in the nine month period, a 14.6 percent rise from a year ago. However, a rising non-performing loan ratio, at 2.5 percent versus 2.3 percent, was a concern for investors, sending the lender’s shares down by 2.3 per cent.

While, Indonesia’s largest private lender, Bank Central Asia, is next in line to release its financial performance results on Thursday.

Furthermore, The Statistics Indonesia announced the latest agricultural statistics after a lengthy revision process due to its low credibility. The statistics showed that Indonesia is estimated to record a surplus in rice production of 2.85 million tons this year.

President Joko Widodo threw his support on the new statistics, saying the government, or the Agricultural Ministry, will not come up with its own data that was conflicting BPS’s data in the past.

From overseas, US home sales fell 5.5 per cent month-on-month to 553,000 in September due to higher interest rates. The data is below expectation and may provide supports for the rupiah today.

May you have a profitable day.

US$1: Rp14,500

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