Asian Stock Markets Somewhat Recover from Cyprus Bailout Uncertainty
Despite global concerns, the bailout issue in Cyprus did not push Asian stock markets - including the Indonesia Stock Exchange (IHSG) - further in a downward spiral. From today's rebound of Asian stock indices we can conclude that market participants were optimistic after the meeting of the Cyprus parliament. Previously, panic emerged as imposition of fees to depositors was announced, although it is still planning only and not in effect yet.
Market participants are also in anticipation of the Federal Reserve's Federal Open Market Committee (FOMC) meeting to discuss the stimulus topic.
The majority of Asian stock markets increased and that impacted on the positive growth of the IHSG. The IHSG's performance was rather flat during intraday but in the end rose 0.41% to 4,822.63 on Tuesday. Trade volume and total value of transaction fell, with foreigners mostly selling their Indonesian assets and domestic investors mostly buying.
The IDR rupiah was still down in line with investors' caution before the result of the Cyprus parliament vote regarding the bailout structure; to meet the Euro-zone's requirement to charge Cypriot depositors or not. Market participants are still worried that parliament will not agree and thus the country is going to default.
The rupiah's decline was limited due to the statement of Philip Lowe, deputy governor of the Reserve Bank of Australia (RBA), that the exchange rate of the Australian dollar is currently not high. Also, the rise of foreign direct investment (FDI) in China (a 6.3 percent growth in February to US $8.21 billion) limited the rupiah's fall.
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