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Today's Headlines Bank Indonesia
The central bank of Indonesia (Bank Indonesia) raised its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points (bps) to 5.75 percent at the two-day policy meeting that was concluded on Thursday (26-27 September 2018). Also the deposit facility and lending facility rates were raised by 25 bps to 5.00 percent and 6.50 percent, respectively.
In line with expectations, the US Federal Reserve decided to raise its benchmark interest rate by 25 basis points to the range of 2.00 - 2.25 percent at the September policy meeting that was concluded on Wednesday 26 September 2018. It is the Fed's eight rate hike since 2015 and the third one so far in 2018.
All eyes remain on the Indonesian rupiah today (04/09). Yesterday, the Indonesian currency depreciated 0.71 percent to IDR 14,815 per US dollar (Bloomberg Dollar Index), and considering external pressures remain high the rupiah is expected to continue its decline in the foreseeable future. Authorities' efforts are able to smoothen the rupiah's weakening trend, hence avoiding sudden big slumps that could trigger panic. But to reverse the current trend of the rupiah, there are no short-term solutions.
The central bank of Indonesia raised its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points (bps) to 5.50 percent at the August 2018 policy meeting. The decision was in line with our expectations as heavy pressures have been affecting the rupiah after the collapse of the Turkish lira.
Indonesian assets are under pressure on Monday (13/08). By 16:00 pm local Jakarta time, the Indonesian rupiah had depreciated 0.90 percent to IDR 14,608 per US dollar, while the benchmark Jakarta Composite Index had plunged 3.55 percent. Although all emerging markets in Asia are under pressure on Monday, Indonesia is seemingly the most fragile one.
In line with expectations, Indonesia's foreign exchange reserves continued to decline for the sixth consecutive month. Per late-July 2018 the country's foreign exchange reserves amounted to USD $118.3 billion, down from the level of USD $119.8 billion one month earlier.
The central bank of Indonesia (Bank Indonesia) believes that the Indonesian government needs to make a more careful selection in terms of infrastructure development projects in order to curtail the big amount of imports that put pressure on the country's current account balance and rupiah exchange rate.
The Indonesian rupiah had been fairly stable against the US dollar since Bank Indonesia's aggressive 0.50 percent rate hike in late-June (a move that caught many by surprise). However, after the central bank of Indonesia decided to leave its benchmark interest rate unchanged at the July policy meeting (which was concluded on Thursday, 19/07), the rupiah has become under heavy pressure again.
In line with expectations the central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (the 7-day Reverse Repo Rate) at 5.25 percent at the two-day July policy meeting (concluded on Thursday 19 July 2018). Meanwhile, the deposit facility and lending facility rates were kept at 4.50 percent and 6.00 percent, respectively.
The current account deficit of Indonesia could widen to 2.5 percent - or more - of the nation's gross domestic product (GDP) in the second quarter of 2018 according to Bank Indonesia's Senior Deputy Governor Mirza Adityaswara. He added that a current account deficit below 3 percent of GDP is still in the safe zone. Dividend payouts are expected to put additional pressure on the Q2-2018 current account deficit of Indonesia.
Latest Columns Bank Indonesia
Chances are big that Perry Warjiyo will become the next governor of Indonesia's central bank (Bank Indonesia). On Wednesday (28/03) Warjiyo, the sole nominee of Indonesian President Joko Widodo to replace incumbent Bank Indonesia Governor Agus Martowardojo after the latter's term ends in May 2018, appeared before the House of Representatives' (DPR) financial commission for a "fit and proper" test.
The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate - the BI 7-day Reverse Repo Rate - at 4.25 percent at the February Board of Governor's Meeting (14-15 February 2018). Meanwhile, it maintained the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively (effective per 19 February 2018).
The central bank of Indonesia (Bank Indonesia) said it needs about two years to complete a study about the possibility of issuing a digital rupiah currency (Central Bank Digital Currency, or CBDC). Agus Martowardoyo, Governor of Bank Indonesia, said the lender of last resort has just started to study the possibility of using a digital rupiah for domestic payments.
The central bank of Indonesia, Bank Indonesia, left its interest rate regime unchanged - for the fourth straight month - at the January 2018 policy meeting. The benchmark BI 7-day Reverse Repo Rate was kept at 4.25 percent, while the deposit facility and lending facility rates were held at 3.50 percent and 5.00 percent, respectively (effective per 19 January 2018). These decisions were in line with analyst forecasts.
Although the Indonesian rupiah has been strengthening against the US dollar since mid-December 2017, the rupiah may encounter serious pressures in the year 2018 amid US tax reforms, the US Federal Reserve's further monetary tightening, and unstable geopolitics. Meanwhile, Indonesian exports are expected to grow, but only in the range of 5-6 percent year-on-year (unlike 2017 when the nation's exports rebounded 17 percent).
At the monthly policy meeting on 13-14 December 2017, Bank Indonesia decided to hold the benchmark BI 7-day Reverse Repo Rate at 4.25 percent, while it maintained the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively, effective per 15 December 2017.
In line with expectations, the central bank of Indonesia (Bank Indonesia) left its benchmark interest rate unchanged on Thursday (16/11). The seven-day reverse repurchase rate (BI 7-day Reverse Repo Rate) was kept at 4.25 percent for a second straight month. Meanwhile, the deposit facility and lending facility rates were kept at 3.50 percent and 5.00 percent respectively.
The central bank of Indonesia (Bank Indonesia) said it will revise its outlook for Indonesia's economic growth in full-year 2017 after the Q3-2017 GDP growth figure - released at the start of the week - was well below expectations. Previously, Bank Indonesia set its economic growth target for Indonesia in 2017 in the range of 5.0 - 5.4 percent year-on-year (y/y).
The Bank Indonesia (BI) Board of Governors agreed to hold the BI 7-day Reverse Repo Rate at 4.25 percent, while maintaining the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively, effective per 20 October 2017. The decision was in line with efforts to maintain macroeconomic and financial system stability, while stimulating the domestic economic recovery.
The central bank of Indonesia (Bank Indonesia) made another surprise move by cutting its benchmark BI 7-day Reverse Repo Rate 25 basis points (bps) from 4.50 percent to 4.25 percent at the September 2017 policy meeting. Meanwhile, Bank Indonesia also lowered the deposit and lending facility rates by 25 bps to 3.50 percent and 5.00 percent, respectively, effective per 25th September.
