Skip to main content

Indonesian Rupiah Affected by China Central Bank’s Interest Cut

From Indonesia Investment

March 2, 2015

The Indonesian rupiah - in line with other emerging Asian currencies - feels the negative impact of China’s interest rate cut. According to the Bloomberg Dollar Index, the rupiah had depreciated 0.40 percent to IDR 12,984 per US dollar at 11:10 am local Jakarta time on Monday (02/03), coming very close to the psychological boundary of IDR 13,000. Last Saturday (28/02), China’s central bank announced to cut its one-year deposit rate and the one-year lending rate by 25 basis points each to 2.50 percent and 5.35 percent, respectively.

It was the second time in less than four months that the central bank of the world’s second-largest economy (People’s Bank of China) cut its benchmark interest rates, in another attempt to boost the country’s sluggish economic growth and combat possibly looming deflation. The central bank’s latest move came a few days before the annual meeting of China's parliament. The People’s Bank of China also raised the deposit-rate ceiling from 1.2 times to 1.3 times, implying that Chinese banks are now able to pay a bigger margin over the central bank’s benchmark. This curbs financial repression that has seen China’s savers effectively subsidize debt-funded investment. China’s yuan depreciated to its weakest level since October 2012 after the central bank’s latest move.

For detailed story, visit here.

Comments

Post a Comment

Popular posts from this blog

Indonesia's Astra Pins Hopes on Inexpensive Cars

From Wall Street Journal Feb 14, 2013 PT Astra International plans to continue dominating Indonesia's booming car and motorcycle markets by spending billions of dollars on expansion and becoming the first auto maker to sell a car priced to reach the country's emerging middle class. Astra controls 54% of the passenger-car market through joint ventures with Japan's Toyota Motor Corp., Daihatsu Motor Co. and Isuzu Motor Ltd., and holds 58% of the motorcycle-and-scooter market through a joint venture with Honda Motor Co.  To expand the pool of Indonesians who can afford a car, Astra plans next quarter to introduce models with sticker prices as low as $8,000 through its joint ventures with Toyota and Daihatsu. Currently, the least-expensive passenger cars in Indonesia sell for at least $12,000. "We will be the first offering affordable vehicles," he said. "This year, [auto-sales growth] should at the very least be flat, provided this ne...
61 comments
Read more

POSCO to lift Indonesia investment to $11 billion over next 5 years: Jakarta

From Reuters Oct 19, 2012 South Korean steelmaker POSCO will almost double its investment in Indonesia to $11 billion over the next five years, from $6 billion currently, Chief Economics Minister Hatta Rajasa said on Friday. The world's fourth-biggest steelmaker, already has a multi-billion dollar joint venture with Indonesian state-owned PT Krakatau Steel, the country's biggest steel producer. Earlier this year, the South Korean firm's affiliate POSCO Engineering & Construction, formed a consortium to build two 300-megawatt power plants on Indonesia's Sumatra island, worth around $1 billion. A POSCO spokesman in Seoul said the South Korean firm has yet to make detailed investment commitments in Indonesia, and noted other partners would jointly invest in any projects. Foreign direct investment in Indonesia stayed strong in the second quarter, showing the G20 member remained a magnet in a troubled global economy and that changes in mining ownership r...
34 comments
Read more

Indonesia to top China as world's biggest raw sugar importer

From Bloomberg Business Week Sept 19, 2012 Indonesia's struggle to boost sugar output due to competition for land and under-investment is forcing the country to spend heavily and become the world's biggest importer of the sweetener in place of China, which has ramped up domestic output.  Sugar consumption in Indonesia, the world's fourth most populous country with around 240 million people, is seen growing  around 4 percent annually, according to the  International Sugar Organization  (ISO).  "We forecast that  Indonesia  will import 2.15 million tonnes of raw sugar in 2012/13 (October/September), which will make the country the world's largest raw sugar importer," said Sergey Gudoshnikov, a senior economist with the ISO.  "They are condemned to seek large-scale imports." Yamin Rahman, executive director of the Indonesian Refined Sugar Industry Association, said, "Our raw sugar imports are big because our population is large and ...
12 comments
Read more