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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
ASIA
- Bank of Indonesia (BI) decided to leave its benchmark rate steady at 3.5% earlier this morning (as expected), but kept a ‘hawkish’ stance in aim to counter the rising inflationary pressures in Asia and maintain IDR stability.
- BI is expected to raise RRR (reserve requirement ratio) to 6% in June, 7.5% in July and to 9% in September.
- The central bank specified that the RRR hike will reduce about 110 UDR of liquidity.
- BI sees inflation exceeding the 4-percent upper tolerance band in 2022 before falling back within the 2%/4% range in 2023.
- The top chart below shows that Indonesia CPI has been surging in the past few months, up from 1.9% in December to 3.5% in April.
- BI remains optimistic about the economy, expecting growth to be around 5% for this year.
- Indonesia 10Y bond yield is up slightly following the decision; with a current 10Y yield at 7.20% (and an inflation rate of 3.5%), the bottom chart shows that Indonesia still offers the second highest 10Y real yield among the EM world (+3.7%).
- The CNY depreciation in recent weeks has been weighing on IDR, with USDIDR surging from 14,350 in mid-April to a high of 14,738 last week before consolidating below 14,700 in recent days.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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