JAKARTA (TheInsiderStories) — Good morning and happy chinese new year! With high expectation of profit, Indonesian financial market did not show gain at the market closing prior to the lunar new year holiday. Rupiah against Dollar slightly appreciating to 13,976.
The Jakarta Composite Index closed declining by 0.87 percent to 6,481.45, with Rp517.88 billion. So far, market still reacted to United States (US) labour and manufacturing data, as the trade with China has started to impact some sectors.
United Nations Conference on Trade and Development (UNCTAD) warned the end of US-China trade deal in March that could impact global economy. UNCTAD stated that if US imposes additional tariffs to Chinese goods, there will be a massive implications to international trade system.
Currency war and high unemployment rate are some of the things that can occur if the US-China trade war goes worse. According to UN, Asian countries will suffer the most because of protectionism.
Small and poor countries will also be troublesome in facing external turmoil. Moreover, East Asia producers will be hit the hardest. Higher trade costs will make companies distancing from East Asia supply chain. In the report, export in the area can diminish by US$160 billion.
The net gold purchases by central banks across the globe totaled $651 trillion in 2018. The buying hit the highest level since 1971. The boost in purchases was mainly led by Russia, Turkey and Kazakhstan along with central banks from other countries around the world.
When compared with the prior year, the gold purchases soared higher by 74 percent, said the latest Gold Demand Trends Report published by the World Gold Council. The net gold purchases by central banks had totaled only $374.8 trillion in 2017.
Russia added $274.3 trillion to its gold reserves in 2018. This is the highest annual purchases on record by the country. For the fourth year in a row, the annual purchases exceeded $200 trillion. The country’ gold reserves at the end of the year were $2,113 trillion and have increased for 13 consecutive years.
Last year, Turkish central bank purchases totaled Rp51.5 trillion and Kazakhstan’ gold reserves have increased by $50.6 trillion, Hungary increased its gold reserves ten-fold to $31.5 trillion, Poland’ gold reserves surged higher by $25.7 trillion, and the purchases by the country witnessed notable year on year jump by 25 percent.
Among other countries, India recorded net gold purchases of $40.5 trillion. Mongolia bought $22 trillion of gold, whereas the Central bank of Iraq bought $6.5 trillion. Then, the State Oil Fund of Azerbaijan reported addition of $14.3 trillion to its gold reserves. The notable gold sellers were Australia, Germany, Sri Lanka, Indonesia and Ukraine.
Go to domestic issues. Indonesia received reports from International Union for Conservation of Nature, mentioning that palm oil land is nine times more efficient, compared to other vegetable oil plants. The agency realized that palm oil plantation land opening has a damaging impact to the environment. But if its being boycotted, then there will be more other vegetable oil plantations.
Indonesia is now facing European Union’ RED II policy, aims to stop using plantations that can cause deforestation, in 2030. Indonesia’ palm oil land expansion is being blamed for the environmental damage. The policy itself may impact Indonesian exports, as EU contributes 15 percent of Indonesia’ palm oil export.
Meanwhile, Bank Indonesia’ Governor Perry Warjiyo appealed to all parties not to worry about the current account deficit (CAD). He said, the government is capable to maintain the flows of foreign investment entering the country.
In the fourth quarter of 2018, for an example, the country’ capital account experienced surplus. He said that there would be a $5 billion surplus in the state’s balance of payments for the fourth quarter of 2018.
The figure is a huge rebound after the deficits in quarters two and three. Finance Minister Sri Mulyani Indrawati earlier said that the CAD is not a sin as long as it could be controlled in a bid to support the economy.
May you have a profitable day!