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Asia Sovs Little Changed, BI Rate Decision Wednesday

ASIA RATES
DataEM BulletHomepagemarkets-real-timeBulletEmerging Market News

Asian EM sovs have had another slow session, yields are little changed. INDON is slightly outperforming PHILIP with the front-end spread difference closing.

  • Tomorrow, Bank Indonesia meet for the July rate decision. BI is expected to keep its key rate at 6.25% to support the rupiah, the currency has somewhat recovered since the June meeting where is traded at 16,430, it is currently trading at 16,203, however there are concerns the currency remains vulnerable due to future fiscal policies from the new government.
  • The BI Governor Warjiyo mentioned there is a possibility of a rate cut later in 2024 if the rupiah stabilizes further while Inflation is projected to meet the 1.5%-3.5% target, according to BBG.
  • The front-end PHILIP curve currently trades 4.5bps tighter than INDON but flattens out and trades 6-7bps wider out the curve.
  • Cross-asset: Ahead of BI tomorrow the USD/IDR is 0.14% higher at 16,202, while the USD/PHP is unchanged at 58.458, the IDR is the worst performing Asian currency today behind JPY. In Equities, the JCI is down 0.35%, while the PSEi is up 0.10%.
  • Looking ahead, Bank Indonesia is expected to keep rates at 6.25% on Wednesday
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Asian EM sovs have had another slow session, yields are little changed. INDON is slightly outperforming PHILIP with the front-end spread difference closing.

  • Tomorrow, Bank Indonesia meet for the July rate decision. BI is expected to keep its key rate at 6.25% to support the rupiah, the currency has somewhat recovered since the June meeting where is traded at 16,430, it is currently trading at 16,203, however there are concerns the currency remains vulnerable due to future fiscal policies from the new government.
  • The BI Governor Warjiyo mentioned there is a possibility of a rate cut later in 2024 if the rupiah stabilizes further while Inflation is projected to meet the 1.5%-3.5% target, according to BBG.
  • The front-end PHILIP curve currently trades 4.5bps tighter than INDON but flattens out and trades 6-7bps wider out the curve.
  • Cross-asset: Ahead of BI tomorrow the USD/IDR is 0.14% higher at 16,202, while the USD/PHP is unchanged at 58.458, the IDR is the worst performing Asian currency today behind JPY. In Equities, the JCI is down 0.35%, while the PSEi is up 0.10%.
  • Looking ahead, Bank Indonesia is expected to keep rates at 6.25% on Wednesday