Optimism About Indonesia’s Future

Mutiara Nabila reporting for Bisnis writes that the exchange rate of Indonesia’s rupiah continued to strengthen in early trading on Thursday (27/4/2023), following the weakening of the US dollar index.

Quoting Bloomberg data the rupiah opened up 44.5 points or 0.30-percent to IDR 14,791 per US dollar. Meanwhile, the US dollar index weakened 0.08 percent to 101.38.

Together with the rupiah, other currencies in Asia also strengthened including the Japanese yen strengthening 0.10-percent, the Taiwan dollar strengthening 0.03-percent, the Indian rupee strengthening 0.18-percent, and the Thai baht strengthening 0.20-percent.

Monex Investindo Futures (MIFX) analysts said that the weakening of the US dollar was caused by traders waiting for US economic growth data and the Federal Reserve’s preferred inflation data to be released, report Bisnis.

“The focus right now is mainly on US first quarter GDP data due later today, which is expected to show that growth slowed after a stronger-than-expected fourth quarter,” explained MIFX Analysts in research, Thursday (27/4/2023).

Bisnis report that high interest rates, high inflation and slowing manufacturing activity are expected to have negatively affected the US economy over the past three months. The Fed’s preferred inflation data, the personal consumption expenditures price index, will be released later today, and is expected to show that inflation held steady in March from the previous month.

However, despite signs of slowing growth, some Fed officials are calling for more rate hikes this year, especially as inflation remains well above the central bank’s target range. 

Meanwhile, domestically, Macro Equity Strategist Samuel Sekuritas Indonesia, Lionel Priyadi, said that currently foreigners are quite optimistic about the prospects for the Indonesian market. Indonesia’s stock and bond markets are moving positively due to high foreign enthusiasm for Indonesia’s economic prospects, say Bisnis.

The inflow of foreign funds into the JCI (Jakarta Stock Exchange Composite Index) reached USD 122.1-million or the equivalent of IDR 1.81-trillion on Wednesday (26/4/2023) which caused the JCI to rise 1.3-percent.

“Although data on the inflow of foreign funds into the bond market is still not available, the 10-year Indonesian Government Bonds (INDOGB) yield fell by 15 bps to 6.52-percent according to our expectations. We estimate that the inflow of foreign funds will continue as global investors leave from the commodity market as well as the US stock and bond market,” he explained.

Samuel Sekuritas Indonesia also estimates that the 10-year INDOGB yield has the potential to continue declining towards the range of 6.45 to 6.55-percent today and the rupiah will continue to appreciate in the range of IDR IDR 14,800 to IDR 14,900 per US dollar.

Source: Bisnis

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