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

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

Indonesia’s economy faces gathering headwinds

From Bloomberg Dec 6, 2013 Indonesian policy makers are grappling with a depreciated exchange rate, elevated inflation and diminished foreign capital inflows undermining President Susilo Bambang Yudhoyono’s legacy of economic stability before he steps down next year. His failure to fix infrastructure gaps in his two terms has added to price pressures, threatening his party’s chances at elections in 2014. The government will allow foreign ownership of as much as 100 percent on airports, airport services and ports, Mahendra Siregar, chairman of the Investment Coordinating Board, told reporters today. For ground and freight terminals, it may be as high as 49 percent, while a cap on overseas holdings in 10 other industries may be eased, he said. The World Bank said last month downside risks to Indonesia’s economic outlook are sizeable, as higher borrowing costs and inflation may have a greater-than-expected effect on domestic demand. Exports have dropped for 18 consecutive months. “Ext

Indonesia is managing the global recession better than most

Indonesia is managing the global recession better than most, thanks to its tough finance minister. Solenn Honorine and George Wehrfritz NEWSWEEK From the magazine issue dated Jan 19, 2009 Last month a financial tidal wave washed over Indonesia, but not the one kicked up by the global credit crisis. Money flooded into government coffers from individuals and corporations eager to avail themselves of Jakarta's "sunset policy" on tax delinquency, which forgave past evasions in exchange for good behavior going forward. The exact size of the surge isn't yet known, but economists estimate that tax receipts were up more than 50 percent for the year. "We saw quite a big jump" in revenue in December from "taxpayers who never existed [on the tax rolls] or want to correct mistakes made in the past," says the plan's creator, Finance Minister Sri Mulyani Indrawati. Indonesians, she adds, are honoring their tax obligations "in a much more accurate way.&q