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Indonesia Set To Enter "Hard Lockdown," Prepares Tax Structure Overhaul


USD/IDR caught a bid this morning, amid lingering Covid-19 worry and talk of an impending declaration of a nationwide lockdown, with an element of catch-up with overnight greenback moves also factored in. The rate has crossed above yesterday's two-month high and last sits +38 figs at IDR14,483. Further gains past Apr 28 high of IDR14,518 would bring Apr 23 high of IDR14,550 into view, while a dip through yesterday's low of IDR14,415 would expose the 50-DMA at IDR14,374.

  • The Straits Times ran a source report suggesting that Indonesia is preparing to implement a "hard lockdown" from tomorrow. The report noted that top officials will hold an internal meeting to discuss the details today. Meanwhile, Central Java, the country's third-biggest province, has tightened Covid-19 restrictions.
  • Pres Jokowi told reporters Monday that Indonesia will expand its vaccination campaign by offering Covid-19 jabs to all people aged 12 or more. The local regulator has approved the Sinovac product for emergency use on teens.
  • FinMin Indrawati revealed that the gov't is discussing tax reform plan with lawmakers. Among the proposed changes are a VAT hike (to 12% from 10% on most goods and services) and a new income bracket (35% tax on people with an annual salary above IDR5bn). The gov't also wants to target firms that declare losses through creative accounting and create a new tax amnesty scheme.
  • The central bank said they are shortening operation hours for some operations, owing to stricter movement curbs. Separately, Gov Warjiyo said that Bank Indonesia already acts to support the economy outside of its policy mandate, adding that the benchmark interest rate will remain on hold until there are signs of pick up in domestic CPI.
  • Indonesia's Jun Markit M'fing PMI & monthly inflation report, both due Thursday, headline the local docket this week.
  • USD/IDR 1-month NDF last +5 figs at IDR14,546. Bulls look for a break above Jun 21 high of IDR14,578, which would bring Apr 21 high of IDR14,615 into play. Bears eye Jun 18 low of IDR14,438 for initial support.

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