JAKARTA (TheInsiderStories) — Good morning! Indonesian financial market is getting Christmas present. Rupiah against Dollar closed strengthening 0.13 percent to 14,480, while the Jakarta Composite Index grew by 0.25 percent to 6,163.59.
The seasonal Santa rally is predicted to merry stocks market. And there’s more possibility that Rupiah and stocks market will continue their strengths this week.
Bank Indonesia’ (BI) Governor Perry Warjiyo mentioned that the Rupiah powered-up due to the market mechanism at work. This also created a foreign exchange alternative mechanism for corporate and retail investors.
“Supply and demand in developing markets is very good. Not only in the spot, swap, but also domestic non-deliverable forward (DNDF) is growing,” he said.
In December, US$200 million daily DNDF has been actively traded. It grew from around $90 million per day in November. But ideally, according to the central bank, traded DNDF value is $1 billion per day.
Meanwhile, in the first BI’ sharia bonds or Sukuk auction, all Rp3.035 trillion (US$209.31 billion) bid won. The Bank Sukuk is another monetary instrument, especially made for short-term maturity to fulfill banks liquidity.
The Sukuk is added to other sharia instruments that the central bank utilizes, such as BI sharia certificate, BI sharia facility, reverse sharia repurchase, and State sharia securities repurchase. Even so, Warjiyo considers the Rupiah to still be undervalued. He expects that more positive sentiments can strengthen the Rupiah to against the Dollar.
But sadness hampered part of Indonesia. Last saturday tsunami hits Sunda Straits and killed around 280 peoples, 584 peoples hurt and 12 peoples missing.
In the United States (US), President Donald Trump’s dissatisfaction with the central bank Governor Jerome Powell looks set to continue next year, following the Federal Reserve‘s rate hike. Trump is rumored to be planning to fire Powell.
Several of Trump’s top advisors have warned that dismissing Powell could be a dangerous act. Though it is still uncertain whether Trump will really fire Powell or not.
The US is now also facing a partial government shutdown, as Trump continues his dispute with the senate over the proposed border wall. Trump insists to build the $5 billion border wall, while Democrats rejected his funding request. With no funding deal, Trump is threatening that he will shutdown the government for an extended period.
Moreover, Trump appointed Deputy Secretary of Defense, Patrick Shanahan, as Acting Secretary of Defense starting Jan. 1, 2019 followed the resignation of James Mattis last week. He said, Shanaha has a long list of accomplishments while serving as Deputy, and previously Boeing.
Ahead this week, the US will release its consumer confidence and housing data. In Asia, Hong Kong will release trade balance data and China to publish its November’s industry profits data.
In Japan, the unemployment rate and retail sales figures will be announced. Bank of Japan (BoJ) will also give a summary of opinions, inflation and economic growth projection for next year. Bank of Japan Governor Haruhiko Kuroda is expected to give a brighter signal regarding quantitative easing policy.
Merry Christmas and may you have a profitable week!