Risk Appetite Returns, Indonesian Rupiah Appreciates against US Dollar
The Indonesian rupiah rate, which had been under extreme pressure amid the start of the novel coronavirus (COVID-19) crisis in March 2020, rebounded in April 2020 and continued this rebound throughout May 2020 (albeit at a less impressive pace).
While in April 2020 the Indonesian rupiah had appreciated 7.4 percent against the US dollar, the pace of appreciation slowed to 2.6 percent in May 2020. It shows that investors have gained more confidence and now see light at the end of the (COVID-19) tunnel, hence inflows into Indonesian sovereign debt paper returned in April as well as in May, as in various nations the number of new COVID-19 infections and deaths is declining.
Meanwhile, the central bank of Indonesia (Bank Indonesia) must be relieved seeing the recovering rupiah over the past two months. In combination with very low inflation and the under-control current account deficit it could even be a reason for Bank Indonesia to go for another interest rate cut. However, the question is to what extent lower interest rates can boost economic growth in present conditions.
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Poll Indonesia Investments:
According to you at what pace will the Indonesian economy grow in 2020?
Voting possible: -
Results
- Lower than 0.0% (26.8%)
- Higher than 2.0% (17.9%)
- 0.5% - 1.0% (15.9%)
- 0.0% - 0.5% (15.8%)
- 1.0% - 1.5% (11.8%)
- 1.5% - 2.0% (11.8%)
Total amount of votes: 1025