Financial Counsellor and Director for the Monetary and Capital Markets Department of IMF Tobias Adrian delivers a press statement on Global Financial Stability Report on the sidelines of the 2018 IMF-WBG Annual Meetings in Nusa Dua, Bali (10/10) - Photo by Committee

JAKARTA (TheInsiderStories) – Good morning. International Monetary Fund (IMF) warned a possible crisis in the global countries followed the trade tension, rising geopolitical risks and policy uncertainty in major economies. The agency said, it is possible that emerging markets other than China may face outflows in the debt market for at least US$100 billion in the medium term

“A further escalation of trade tensions, as well as rising geopolitical risks and policy uncertainty in major economies, could lead to a sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions,” the fund said in the report.

As an example, after Argentina and Turkey, Pakistan’s Finance Minister Asad Umar announced on Monday night (09/10) that his country has asked bailed out from the IMF US$7 billion for a way out of its foreign currency crisis. This adds to concerns about the health of emerging economies across the world.

Meanwhile, United States’s President Donald Trump repeated the threat of imposing tariffs on additional Chinese imports worth $267 billion if China retaliated on tariffs and other measures taken by the US in the trade war with it.

This situation has scale up investor concerns about the prospects for global economy. The Dow Jones Industrial Average closed down 0.21 percent at 26,430.57 and the S&P 500 index fell 0.14 percent to 2,880.34.

Other pressures came from the commodity market, the crude oil prices rose on Tuesday, when Hurricane Michael resulted in the closure of more offshore oil platforms. The International Energy Agency (IEA) warned that global markets were entering the red zone.

Globally, the supplies from Iran and Venezuela have shrunk, creating a risky situation for the world economy, according to IEA Executive Director Fatih Birol. He makes direct requests to the Organization of Petroleum Exporting Countries and other large producers to increase output. He also welcomed Saudi Arabia’s efforts to increase production but said supplies might remain tight.

Yesterday, West Texas Intermediate oil price for November contract closed up 67 cents at $74.96 per barrel on the New York Mercantile Exchange. While, the price of Brent oil for December delivery rose $1.09 and ended at the level of $85 per barrel on the ICE Futures Europe exchange.

Domestically, the impact of Rupiah weakening has affected several companies. The car producer such as PT Toyota Astra Motor, PT Astra Daihatsu Motor, PT Isuzu Astra Motor Indonesia and PT Suzuki Indomobil motor have raised the prices of their products.

On Tuesday, Rupiah weakened 0.13 percent to 15,238 per US dollar and the Bank Indonesia rupiah middle rate eroded 0.26 percent to 15,233. Besides the trade tension, the stepped of People’s Bank of China to cut its statutory reserve requirement and pressure on the South African currency on political risks also weighed on emerging market currencies, including the Rupiah.

But different reaction from the investors in the capital market, the Jakarta Composite Index (JCI) rallied in two days. Yesterday, the JCI closed up 0.62 percent to 5,796.79. However, foreign investors still recorded net sales, aka net sell of Rp 300.25 billion.

For today, we asserted the pressure on Rupiah will continues followed the global financial market pressures and no positive issues from domestic.

May you have a profitable day.

Written by TIS Intelligence Team