Indonesia’s foreign exchange reserves at the end of January 2018 were recorded at USD131.98 billion, higher than the position at the end of December 2017 of USD130.20 billion. The increase was mainly influenced by foreign exchange earnings derived from taxes and export oil results and gas part of the government, withdrawal of government foreign loans, as well as the results of securities auctions of Indonesia Bank (SBBI) forex. The foreign exchange revenue exceeds the foreign exchange requirement, especially for foreign debt repayment of government and SBBI forex. The position of foreign exchange reserves at the end of January 2018 is sufficient to finance 8.5 months of imports or 8.2 months of imports and servicing of official foreign debt, and is above the international approximately standard imports of 3 months. Indonesia Bank believes, the foreign exchange reserves are able to support the external sector resilience and maintain the sustainability of Indonesia’s economicgrowthinthefuture.
Indonesia Composite Bond Index (ICBI) at yesterday’s close at 245.1851 or edged up + 0.0320 points from Tuesday’s close. The performance of the total corporate bond return index (INDOBeXG-Total Return) and corporate bonds (INDOBeXC-Total Return) also closed slightly higher by + 0.0319 points at 242.3468 and + 0,0309 points at 255,5497. The increase in yield continues to color the IBPA-IGSYC (IBPA-Indonesia Government Securities Yield Curve)majority curves, although not as high as before. The average of medium (5-7 years) yield and long (> 7years) tenor groups continued to rise by + 1.71 bps and + 0.71 bps, respectively. While short tenor (<5years) down -0.61bps. INDOBeXG-Effective Yield yesterday also moved down even though very thin ie -0.0001 point to the level of 6.3818. The four benchmark SUN series three-series price yesterday closed higher in the range of + 7.26bps to + 64.79bps. Only the FR0075 series that closed weakened by -2.52bps. However, the price of SBN series FR and ORI majority yesterday still looks predominantly weakened by an average down -2.76bps. So INDOBeXG-Clean Price yesterday closed down -0.0084 point at level 119.7342. The activity of trading transactions yesterday seemed quiet. Total frequency down -23.90% from 820 times to 624 times, and total volume down -48.53% from Rp21.38tn to Rp11.00tn. The more volume drops hit short-term SUN series transactions with total decreases of Rp9.72tn. FR0065 yesterday was the most active SBN series transacted with total frequency 114 times. But the largest total transaction volume recorded FR0064 is Rp1, 33tn. For corporate bonds, WOMF02BCN3 recorded the largest frequency of 11 times the transaction, while the largest total volume listed SMFP03CN6 with a value of Rp100 billion. Starting a stable global risk expectations after the easing of selling action hit the global financial market to support the positive performance of the third index of Indonesia’s bond returns. The condition is also reflected in the 5-year of Indonesia’s CDS movement tenor which decreased by -2.36bps. The Indonesia’s foreign reserves increase in January 2018 which rose US $ 1.78 billion to US $ 131.98 billion helped create positive expectations in the market yesterday. However, the market still seems to anticipate an external turmoil, reflected in less solid bond transactions in the secondary market. In addition, the continued Rupiah performance weakening in spot market which has penetrated to the level of Rp13.555 / US $ also put pressure on Indonesian bond market. Similarly with the bond market, JCI yesterday closed up + 0.87% at 6,534.87 level. The domestic bond market is likely to move positively in today’s trading. Despite Indonesia’s increasing foreign exchange reserves in January, the improvement of Indonesia’s debt rating outlook by Moody’s from stable to positive can be a positive catalyst in the market.
The rupiah exchange rate against the US dollar opened lower. Rupiah weakened approaching Rp13.600 per USD. Launched Bloomberg Dollar Index, the rupiah at spot exchange rate trading in the Asian market fell 39 points or 0.29% to Rp13.594 per USD. The Rupiah movement, is in the range of Rp13.584-Rp13.612 per USD. While Yahoo finance noted, the rupiah weakened 43 points or 0.32% to Rp13.593 per USD. In Yahoo finance note, the Rupiah moves in the range of Rp13,550 per USD to Rp13,647 per USD. Samuel Secutirties Research said the dollar index is likely to move higher against several other stronger currencies in the world as US government bond yields rise after the passing of the US government’s deficit budget rises by USD300 billion above analysts’ forecasts. The rise in US bond yields has the potential to encourage the rupiah strengthening against a number of other world’s strong currencies. Rupiah itself is expected to move horizontally in line with the rising foreign exchange positive sentiment reserves. However, further research, positive sentiment is offset by negative sentiment by rising US bond yields are likely to depress the rupiah today. Rupiah in the spot market is estimated to move in the Rp 13,570 per USD-Rp 13,610 per USD range.
The today’s investors main focus will be on the Bank of England’s monetary decision called Super Thursday at 19:00 pm, as investors seek clues to the UK economy amid the continuing Brexit negotiations proliferation as well as internal conflicts within the Conservatives chairman of Prime Minister Theresa May. In addition, a speech from the Australia Reserve Bank Governor will also seize investors’ attention amid the recent downfall of the AUDUSD pair due to pessimistic domestic economic data, if he returns a dovish statement of course the AUDUSD decline could continue. Other sentiments on the day also came from the United States, after Mitch McConell, the majority Senate leader on Wednesday, said Senate leaders had reached a new budget deal that would increase spending limits, which could avoid a government shutdown on Friday.
The gold price has the potential to move down with the catalyst coming from a stronger dollar and a rise in US Treasury yields due to potential US interest rate hikes and a US government avoidance from closing. The support target is at $ 1310 before aiming the key support at $ 1300.
Increased crude reserves and rising US production exceeded 10 million barrels per day could be a negative sentiment for oil price movements on the day with the closest support target seen at $ 61.00.
A strong US dollar and reports, Martin Schulz (leader of the SPD party) will not hold the German finance minister position and a statement from ECB Nowotny, the United States deliberately weaken the dollar could trigger further EURUSD declines on the day with a support target seen at 1.2220 – 1.2200 . The focus today will be on Bundesbank President Jens Weidmann’s address at 15:45 pm.
GBPUSD is likely to move down today, especially if the England Bank provides a dovish monetary decision after the recent discouraging British economic data with support targets seen at 1.3800 and resistance at 1.4000.
Japanese Sentiment current account data released lower than expected as well as a stronger dollar potentially pushing up USDJPY in the short term with eyeing resistance at 109.70 before eyeing a strong resistance at 110.50.
The AUDUSD weakening may potentially continue in the short term amid a stronger dollar sentiment and falling commodity prices with a support target seen at 0.7770. The investors focus today will be on the Australia Reserve Bank Governor speech at 16:00 pm.
The following Indonesia Economic Indicators we update on Thursday 08/02/2018 at 11:51 am:
Source: bloomberg / afp / xhua / bi / ojk / kemenkeu / bps / reuters / antara / ibpa / kontan / bisnis / wartaekonomi / investordaily / bbc / kompas / liputan6 Treasury and International Division – PT Regional Development Bank, Central Java.