Market review
§ The global market was volatile last week in a knee-jerk reaction to the US credit rating downgrade, the Fed’s latest monetary statement, and ECB struggle to contain Greece-like crisis contagion to Italy and French. Yet the impact on domestic financial sector was relatively contained. We believe Indonesia economy is currently more ready to mitigate the impact of a sudden capital reversal on improvement in macroeconomic backdrop, higher foreign exchange reserves, more prudent fiscal monetary policy, and increasing quality of capital inflows.
Global economic update
§ The Fed’s latest monetary statement to maintain interest rate at its lowest level at least until 2013 will likely keep capital inflows to emerging markets intact.
§ The ECB is on the move to stabilize Italy and Spain bond markets. Debt fear spread to France, caused selloff in the banking sector stocks. BIS data suggests that Indonesia’s exposure to Euro-zone banking lending is low.
§ China trade surplus was at year high; accelerated imports growth should support demand for Indonesia’s exports.
Domestic economic update
§ Bank Indonesia retained interest rate at 6.75% in Aug11, and likely to stay steady for the rest of 2011.
§ Indonesia's balance of payment booked surplus of US$11.9bn in 2Q11, doubling from last year. FDI inflows rose to US$5.3bn in the 2Q, the highest since 2004.
Jumat, 19 Agustus 2011
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