Update COVID-19 in Indonesia: 1,298,608 confirmed infections, 35,014 deaths (23 February 2021)
23 February 2021 (closed)
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
Jakarta Composite Index (6,272.81) +17.50 +0.28%
For the first time since 2008 the Organization of Petroleum Exporting Countries (OPEC) agreed to cut crude oil output on Wednesday (30/11) with especially Saudi Arabia ready to accept a big cut in national oil production. "Unlimited" crude oil production led to the supply glut that gave rise to persistently low oil prices and deflationary pressures. Asian stocks climbed on the back of this oil production cut. In early Asian trading on Thursday (01/12), gainers were led by mining, oil and coal producers.
Although markets had been skeptical about the possibility of finding unity among the OPEC members, required to come to a production cut agreement, the deal came through and sent oil rallying the most in eight years, while the US dollar strengthened on better-than-expected US private payrolls data. The ADP National Employment Report showed that private payrolls increased by 216,000 in November, well above expectations (165,000 jobs), after a 119,000 gain in the preceding month.
Moreover, it is not just about OPEC, non-OPEC countries are included. It was reported yesterday that Russia will also join the output reduction deal (for the first time in 15 years) in a bid to prop up crude oil prices. Russia reportedly agreed to unprecedented oil production cuts.
The OPEC deal will see crude oil output reduced by 1.2 million barrels per day (bpd) by January 2017. Production will decline to 32.5 million barrels, while Iran was allowed to raise its oil output to 3.8 million bpd.
Rallying oil prices cause rising expectations about higher US inflation (previously these expectations had already heightened after US president-elect Donald Trump indicated he would enact reflationary policies to boost US economic growth). With US treasuries sliding, the US dollar is resumes its rally against peer currencies.
Meanwhile, with US private employers increasing hiring in November, while also consumer spending rose, the US Federal Reserve obtains additional incentives to decide for an interest rate hike.
In line with other Asian indices, Indonesia's benchmark Jakarta Composite Index had surged 1 percent by 09:30 am local Jakarta time on Thursday (01/12), while the Indonesian rupiah is experiencing some pressure due to US dollar strength. The Indonesian rupiah had depreciated 0.12 percent to IDR 13,571 per US dollar (Bloomberg Dollar Index).