Bank Indonesia (BI) predicts inflation month-on-month (mom) June will rise by over 2% after fuel prices increased. If it is not raised, then inflation will only amounted to 0.7% -0.9%. According to BI' Governor Mr. Agus Martowardojo, the inflation will stabilize again in September-October.
Acting Head of Fiscal Policy Agency Mr. Bambang S. Brodjonegoro assess that inflation will rise to its highest level on July because it is the same momentum between the fuel price hike, the new school year, and the month of fasting. According to the plan, the new price of fuel price will be announced by President Yudhoyono this evening. (Investor Daily)
Bank Indonesia (BI) prepare to intervene in the capital markets to buyback of government securities (GS). The plan is in line with the greater selling pressure from foreign investors. This action came after the U.S. central bank will lower its efforts to buy back government bonds from the capital market. (Bisnis Indonesia).
Logistics Agency (Bulog) began to include meat and soy as the needs of the people who had their stabilization. The agency will begin importing the needs of both on July and October as the market operation steps (Investor Daily)
The sales of 9% stake in PT Bank Internasional Indonesia Tbk (BII, Rp355) apparently do by Malayan Banking Bhd (Maybank). The sales made to as many as 5.05 billion (10.1 lot) shares at a price of Rp355, so that the total transaction was worth Rp1,79 trillion. Transaction was carried out on June 19, from/to PT UBS Securities Indonesia.
Sale of shares intended to add public portion related to floating shares liabilities after tender offer conducted in December 2008. Maybank submitted disclosure to Bursa Malaysia. (Investor Daily)
PT Wintermar Offshore Marine Tbk will hold its buyback from the public because assessing that the company's stock price is still low. The maximum number of budgeted 190 million (5.2%) shares with a fund preparation of the U.S. $ 10 million (equivalent to Rp99,24 billion). The Share buy-back will be the exchange of convertible bonds that have been issued by the company to IFC. (Investor Daily)
for Indonesia Market Summaries 24 June 2013
Showing posts with label Bank Indonesia. Show all posts
Showing posts with label Bank Indonesia. Show all posts
Monday, June 24, 2013
Thursday, May 30, 2013
Indonesia Market Summaries 30 May 2013
The Commission VIII has approved social compensation program required for the government to hike subsidized fuel price
The parliament’s Commission VIII has approved the government’s social compensation programs proposed under the 2013 Revised Budget Plan. The program will cover Rp66.6tn fund and is allocated to, among other programs, rice for the poor (Rp21.9tn), temporary direct aid (BLSM, Rp11.6tn), education aid (BSM, Rp12tn), and basic infrastructure (Rp17.5tn).
To refresh, the government requires approval of such compensation program to execute subsidized fuel price hike. Mind that the approval is still in commission level; to be official the notion must pass the parliament’s plenary. That said, the Vice Minister of Finance Mahendra Siregar gave hint that the price may rise in 17 Jun13 post approval of the 2013 Revised Budget. In a side note, the parliament has also allowed 2013.
Banking industry - new ruling for bank under intensive and special supervision
Bank Indonesia issued a bank regulation #15/2/PBI/2013 concerning bank status and the follow up actions required, especially for those under the intensive and special supervision of the central bank. Banks under the intensive supervision (criteria: CAR>8% but does not meet the CAR based on the bank risk profile, Tier 1 CAR does not meet BI’s regulation, reserve requirement >5% but does not meet RR based on risk profile, net NP>5%, health status of 4 or 5 or health status is 3 but corporate governance is 4) are given one year to improve their condition including writing off bad debts, limitation on management salary, freezing payment on subordinated bonds, improve capital and do not distribute dividend.
Indofood Sukses Makmur and CBP announced Rp185 and Rp186 dividend respectively
INDF announced that they will be paying out Rp185/sh of dividend, while ICBP will be paying Rp186/sh. INDF has prepared Rp1.63tn for the dividend payment, implying 50% payout ratio, to be paid out on August 2. Meanwhile, ICBP has prepared Rp1.08tn, also 50% payout ratio, to be paid on July 31. (Investor Daily)
for Indonesia Market Summaries 30 May 2013
The parliament’s Commission VIII has approved the government’s social compensation programs proposed under the 2013 Revised Budget Plan. The program will cover Rp66.6tn fund and is allocated to, among other programs, rice for the poor (Rp21.9tn), temporary direct aid (BLSM, Rp11.6tn), education aid (BSM, Rp12tn), and basic infrastructure (Rp17.5tn).
To refresh, the government requires approval of such compensation program to execute subsidized fuel price hike. Mind that the approval is still in commission level; to be official the notion must pass the parliament’s plenary. That said, the Vice Minister of Finance Mahendra Siregar gave hint that the price may rise in 17 Jun13 post approval of the 2013 Revised Budget. In a side note, the parliament has also allowed 2013.
Banking industry - new ruling for bank under intensive and special supervision
Bank Indonesia issued a bank regulation #15/2/PBI/2013 concerning bank status and the follow up actions required, especially for those under the intensive and special supervision of the central bank. Banks under the intensive supervision (criteria: CAR>8% but does not meet the CAR based on the bank risk profile, Tier 1 CAR does not meet BI’s regulation, reserve requirement >5% but does not meet RR based on risk profile, net NP>5%, health status of 4 or 5 or health status is 3 but corporate governance is 4) are given one year to improve their condition including writing off bad debts, limitation on management salary, freezing payment on subordinated bonds, improve capital and do not distribute dividend.
Indofood Sukses Makmur and CBP announced Rp185 and Rp186 dividend respectively
INDF announced that they will be paying out Rp185/sh of dividend, while ICBP will be paying Rp186/sh. INDF has prepared Rp1.63tn for the dividend payment, implying 50% payout ratio, to be paid out on August 2. Meanwhile, ICBP has prepared Rp1.08tn, also 50% payout ratio, to be paid on July 31. (Investor Daily)
for Indonesia Market Summaries 30 May 2013
Wednesday, May 15, 2013
BI Rate remains unchanged
BI Rate remains unchanged, higher concern on inflation expectation.
No change on the policy rates. As we have expected, BI rate and FASBI rates were unchanged at 5.75% and 4.00%, respectively, in today’s board of governor meeting.
Inflation remains the key issue. Bank Indonesia maintained its focus on inflation especially considering potential risk of inflation expectation owing to the uncertainty over the government’s fuel subsidy policy. That said, the central bank will continue to absorb liquidity through its longer term instruments to restrain short term inflationary risk. At the same time, such strategy is also meant to maintain the rupiah’s volatility and to fine tune money market internationally.
External imbalance improvement is seen in 1Q13. The central bank highlighted that 1Q13 current account deficit has fallen to 2.4% of GDP from 3.6% in 4Q12 and 2.8% of GDP in FY12, respectively. The reason is sharp decrease in imports at a time when non-oil and gas export remained positive. A more detailed balance of payment data will be released tomorrow.
International reserve increased to US$107.3bn in Apr13 from US$104.8bn in Mar13. The current reserve is equivalent to 5.8 months payment of imports and government’s foreign debt service. Basically, we have expected this in our report last week (see Weekly Economic Research titled S&P downgraded Indonesian sovereign credit rating outlook on 2 May13).
Monetary policy will be more dynamic in 2H13. Until this moment, assuming no major change in subsidized fuel policy, we maintain our BI rate forecast of 5.75% until YE13 and an increase on FASBI rate by no less than 25bps to 4.25% the soonest in Jun13. However, should the government increase subsidized fuel price, Bank Indonesia will definitely be more aggressive in attacking higher inflationary risk.
for Indonesia Market Summaries 15 May 2013
No change on the policy rates. As we have expected, BI rate and FASBI rates were unchanged at 5.75% and 4.00%, respectively, in today’s board of governor meeting.
Inflation remains the key issue. Bank Indonesia maintained its focus on inflation especially considering potential risk of inflation expectation owing to the uncertainty over the government’s fuel subsidy policy. That said, the central bank will continue to absorb liquidity through its longer term instruments to restrain short term inflationary risk. At the same time, such strategy is also meant to maintain the rupiah’s volatility and to fine tune money market internationally.
External imbalance improvement is seen in 1Q13. The central bank highlighted that 1Q13 current account deficit has fallen to 2.4% of GDP from 3.6% in 4Q12 and 2.8% of GDP in FY12, respectively. The reason is sharp decrease in imports at a time when non-oil and gas export remained positive. A more detailed balance of payment data will be released tomorrow.
International reserve increased to US$107.3bn in Apr13 from US$104.8bn in Mar13. The current reserve is equivalent to 5.8 months payment of imports and government’s foreign debt service. Basically, we have expected this in our report last week (see Weekly Economic Research titled S&P downgraded Indonesian sovereign credit rating outlook on 2 May13).
Monetary policy will be more dynamic in 2H13. Until this moment, assuming no major change in subsidized fuel policy, we maintain our BI rate forecast of 5.75% until YE13 and an increase on FASBI rate by no less than 25bps to 4.25% the soonest in Jun13. However, should the government increase subsidized fuel price, Bank Indonesia will definitely be more aggressive in attacking higher inflationary risk.
for Indonesia Market Summaries 15 May 2013
Friday, April 12, 2013
BI rate flat all eyes on government fuel policy
As expected, Bank Indonesia left its BI and FASBI rates unchanged at 5.75% and 4.00%, respectively in today’s governor board meeting. The central bank is confident that the rates remain consistent with this and next year inflation targets of 4.5% ± 1%.
More on liquidity absorption, rather than interest rate hike to fight inflation. The first paragraph of central bank’s press release tells its main focus going forward: inflation. It assesses that inflationary pressure in the early months was not a monetary phenomenon and was due to volatile foods. Thus, BI prefers to absorb excess liquidity to manage the short term shock of inflation. Meanwhile, BI will maintain the rupiah's level at its fundamental in which we see a wider toleration of its depreciation.
On the other hand, Bank Indonesia tones down its growth forecast. It remains firm on the domestic economic condition although rising downside risks, especially from the sub-optimum global economic recovery, are highlighted. It expects growth to hover between 6.2% - 6.6% and 6.6% - 7.0% in 2013 and 2014, respectively, a downward revision from the previous 6.3% - 6.8% and 6.7% - 7.2%.
The central bank expects balance of payment deficit to ease in 2Q13 owing to higher surplus in the capital account. This is considering that it will receive fresh flows from government’s recent global bond issuance amounting to US$3bn. Nevertheless, Bank Indonesia anticipates the deficit in current account to linger as the imports of oil products remain high due to rising subsidized fuel consumption.
Wider toleration for the rupiah's depreciation yet volatility remains stable. As of Mar13, international reserve declined by US$0.4bn to US$104.8bn (equivalent to 5.7 times of import and government’s debt service payment), lower than Feb13 reserve reduction of US$3.6bn. In our view it was because Bank Indonesia tolerated further rupiah weakening due to inflationary and trade deficit risks. The rupiah depreciated by 0.57% mom, reaching Rp9,720/US$ in Mar13. Nevertheless, we think Bank Indonesia had intervened the market to smoothen volatility. It was in a downward trend as shown from the rupiah’s volatility index which fell from 15.5 in Feb13 to 15.0 in Mar13.
Until this moment, we remain comfortable with our BI rate forecast of 5.75% until YE13. Despite Mar13 on-year inflation reaching 5.9% and surpassing BI’s upper limit inflation target of 5.5%, the noise has somewhat been over sounded. Rising headline inflation in early months was due to acceleration of few food prices which is mostly a temporary supply side matter and is related with the government’s agriculture import regulation. Meanwhile, the demand-side inflation, the so-called core inflation, remains relatively steady even if we exclude gold price deflation.
We still expect, however, BI’s lower bound rate (FASBI rate) of the money market to be raised by at least 25bps to 4.25% this year. We think the hike is necessary to support the currency that remains under pressure as a consequence of the current account deficit. We suspect FASBI rate will be hiked in Jun13 the soonest as the central bank is expected to be in an autopilot mode until the next governor is officially appointed.
All eyes on government’s fuel subsidy policy. We believe any monetary policy response will be formulated based on the upcoming policy in curbing fuel subsidy. There are several options being discussed but they mainly fall into two categories: price and volume measures. Price hike option will have larger impact on inflation, by around 2.4ppt vs. the latter which is 0.6ppt. Accordingly it can save more government spending by 0.8% of GDP compared to 0.3% of GDP in fuel consumption rationing policy. Without any firm fuel subsidy policy budget deficit could reach close to 3% of GDP assuming no budget cut and higher education spending to maintain the required 20% of total spending threshold.
More on liquidity absorption, rather than interest rate hike to fight inflation. The first paragraph of central bank’s press release tells its main focus going forward: inflation. It assesses that inflationary pressure in the early months was not a monetary phenomenon and was due to volatile foods. Thus, BI prefers to absorb excess liquidity to manage the short term shock of inflation. Meanwhile, BI will maintain the rupiah's level at its fundamental in which we see a wider toleration of its depreciation.
On the other hand, Bank Indonesia tones down its growth forecast. It remains firm on the domestic economic condition although rising downside risks, especially from the sub-optimum global economic recovery, are highlighted. It expects growth to hover between 6.2% - 6.6% and 6.6% - 7.0% in 2013 and 2014, respectively, a downward revision from the previous 6.3% - 6.8% and 6.7% - 7.2%.
The central bank expects balance of payment deficit to ease in 2Q13 owing to higher surplus in the capital account. This is considering that it will receive fresh flows from government’s recent global bond issuance amounting to US$3bn. Nevertheless, Bank Indonesia anticipates the deficit in current account to linger as the imports of oil products remain high due to rising subsidized fuel consumption.
Wider toleration for the rupiah's depreciation yet volatility remains stable. As of Mar13, international reserve declined by US$0.4bn to US$104.8bn (equivalent to 5.7 times of import and government’s debt service payment), lower than Feb13 reserve reduction of US$3.6bn. In our view it was because Bank Indonesia tolerated further rupiah weakening due to inflationary and trade deficit risks. The rupiah depreciated by 0.57% mom, reaching Rp9,720/US$ in Mar13. Nevertheless, we think Bank Indonesia had intervened the market to smoothen volatility. It was in a downward trend as shown from the rupiah’s volatility index which fell from 15.5 in Feb13 to 15.0 in Mar13.
Until this moment, we remain comfortable with our BI rate forecast of 5.75% until YE13. Despite Mar13 on-year inflation reaching 5.9% and surpassing BI’s upper limit inflation target of 5.5%, the noise has somewhat been over sounded. Rising headline inflation in early months was due to acceleration of few food prices which is mostly a temporary supply side matter and is related with the government’s agriculture import regulation. Meanwhile, the demand-side inflation, the so-called core inflation, remains relatively steady even if we exclude gold price deflation.
We still expect, however, BI’s lower bound rate (FASBI rate) of the money market to be raised by at least 25bps to 4.25% this year. We think the hike is necessary to support the currency that remains under pressure as a consequence of the current account deficit. We suspect FASBI rate will be hiked in Jun13 the soonest as the central bank is expected to be in an autopilot mode until the next governor is officially appointed.
All eyes on government’s fuel subsidy policy. We believe any monetary policy response will be formulated based on the upcoming policy in curbing fuel subsidy. There are several options being discussed but they mainly fall into two categories: price and volume measures. Price hike option will have larger impact on inflation, by around 2.4ppt vs. the latter which is 0.6ppt. Accordingly it can save more government spending by 0.8% of GDP compared to 0.3% of GDP in fuel consumption rationing policy. Without any firm fuel subsidy policy budget deficit could reach close to 3% of GDP assuming no budget cut and higher education spending to maintain the required 20% of total spending threshold.
Thursday, April 11, 2013
Indonesia Today's Market and Business April 11 2013
Realization of capital spending reached 5.6% in 1Q13
The realization of government’s capital spending only achieved 5.6% of Rp184.4tn targeted in APBN 2013. Furthermore, this realization figure is lower than the same period of 2012 which reached 6.71%. The head of government’s fiscal policy, Bambang P.S. Brodjonegoro, mentioned that if the government could optimize the disbursement of capital post, then there would be an additional contribution of 0.2ppt – 0.3ppt to economic growth (Bisnis Indonesia).Kawasan Jababeka prepares Rp9tn to develop CBD
KIJA is preparing Rp9tn to develop a CBD on a land of at least 30ha wide where the first phase will be to develop a residential estate on a 16ha land within the next 12 years with a total investment of Rp4.5tn. Meanwhile, the development of the CBD itself will take approximately 20 years in 2-3 phases. KIJA is currently studying the feasibility of the project where the result is expected to be out by Q1 next year. Aside from offices, the CBD will also have shopping centers, apartments, recreational areas, and town house. (Bisnis Indonesia)Cikarang Property prices boost as new toll access is opened
For Indonesia Market Summaries news, KIJA and LPCK, in their partnership, has opened a new toll access at KM34.7 of the Jakarta-Cikampek toll road to the residential and commercial areas in Cikarang. The two companies have allocated Rp300bn for land clearing and construction for the toll access where each company pays 50% of the total cost. With the new toll access, KIJA and LPCK expect land ASP to increase by at least 20%. (Kontan, Bisnis Indonesia)Summarecon gained Rp600bn loan for working capital
SMRA received an Rp600bn working capital loan from Bank Mandiri with a single digit interest rate and a tenor of 7 years. The company was seeking loan earlier this year to finance the development of their hotels in Bali which is expected to cost Rp700bn. Aside from hotel, SMRA is also eyeing for a township project which they claimed to be their expertise. (Bisnis Indonesia)Agung Podomoro to payback Rp400bn debt
APLN is planning to pay off their Rp400bn syndicated debt using the proceeds from the issuance of their Rp2.5tn bond. The company expects the bond to be issued by June 2013. (Bisnis Indonesia)Ciputra Development reported a consolidated 1Q13 marketing sales of Rp2.9tn
CTRA reported a consolidated 1Q13 marketing sales of Rp2.9tn which is 28.2% of their full year target. Outstanding marketing sales performance is shown by CTRS who book Rp1.3tn or 41.4% of their full year target. On the other hand, CTRP is still lagging and only booked Rp142bn marketing sales which is 8.1% of their full year target. Product mix wise, contribution still come mostly from houses (56%) and shop houses (24%). Meanwhile, geographic wise the largest contribution comes from Sumatra (37%) and the Greater Jakarta area (32%). (Company release)Consumers’ confidence remains stable along Mar13
BI’s consumer confidence index was stable last month than Feb13, as the index was unchanged at 116.8. The relative steady number was due to higher optimism among consumers about the economic condition for the next 6 months despite the index for current economic condition eased owing to lower confidence about job availability (Bank Indonesia).Palm Oil Reserves in Malaysia Drop Most in Two Years but CPO price still drop 1%
Palm oil stockpiles in Malaysia, the world’s second-largest producer, fell the most in more than two years to a seven-month low in March as exports gained for the first time in five months, according to official data. Inventories shrank 11 percent to 2.17 million metric tons last month from 2.44 million tons in February, the steepest monthly drop since January 2011, the Malaysian Palm Oil Board said today. The decline exceeded the median estimate for a 7 percent drop to 2.27 million tons in a Bloomberg survey. (Bloomberg)Comment: although after the announcement of palm oil Inventory decrease higher than consensus expectation (which should be bullish factor on CPO price), the CPO price decreased by 1%. Indonesia Market Summaries assume to this matter as a sign that CPO price would decrease further in 2H13 when CPO production ramp up and palm oil inventory back to increasing trend.
Wednesday, April 10, 2013
Bank Indonesia reported is studying possible hike of benchmark policy rate to deal with inflation
Bank Indonesia (BI) reported is studying possible hike of benchmark policy rate to deal with inflation according to Bisnis Indonesia end of last week. BI governor, Darmin Nasution, said that the central bank will be very careful in hiking the rate, however, if it is necessary BI will not be hesitate to increase it.
Comment: We still see BI rate to stay unchanged at 5.75% this year.
This is due to: First, the current inflationary pressure (5.9% yoy in Mar13) is still mostly driven by the supply shock (volatile food). Meanwhile, demand gauge inflation (core inflation) is relatively stable at 4.2% yoy. The previous chili-driven inflation in 2011 shows that the impacts tends to temporary and normalize after the government boost up the supply through imports. We expect the same trend will happen to the current garlic and onion price after government allow imports; Second, the economic growth momentum is currently easing that will require more accommodative bias monetary policy.
Nevertheless, the prolonged food price normalization that could transpire to core inflation and the delay of fuel subsidy reduction policy could risk on unnecessary monetary policy tightening. The delay in implementing the firm policy to reduce fuel consumption will lead to further pressure on the currency, as the oil and gas trade imbalance will continue to drag down overall trade performance.
Until now, the central bank manages to sustain the equilibrium by strengthening its macro-prudential measure and intervening in FX market. However, it would have to tighten further should the external financing position deteriorating and no improvement in significant improvement.
Comment: We still see BI rate to stay unchanged at 5.75% this year.
This is due to: First, the current inflationary pressure (5.9% yoy in Mar13) is still mostly driven by the supply shock (volatile food). Meanwhile, demand gauge inflation (core inflation) is relatively stable at 4.2% yoy. The previous chili-driven inflation in 2011 shows that the impacts tends to temporary and normalize after the government boost up the supply through imports. We expect the same trend will happen to the current garlic and onion price after government allow imports; Second, the economic growth momentum is currently easing that will require more accommodative bias monetary policy.
Nevertheless, the prolonged food price normalization that could transpire to core inflation and the delay of fuel subsidy reduction policy could risk on unnecessary monetary policy tightening. The delay in implementing the firm policy to reduce fuel consumption will lead to further pressure on the currency, as the oil and gas trade imbalance will continue to drag down overall trade performance.
Until now, the central bank manages to sustain the equilibrium by strengthening its macro-prudential measure and intervening in FX market. However, it would have to tighten further should the external financing position deteriorating and no improvement in significant improvement.
Tuesday, April 9, 2013
Foreign Exchange (FX) Reserves down, Indonesian rupiah volatility eases
The reduction in international reserve eased during March 2013, just as expected.
It fell slightly by USD 0.4 billion to USD 104.8 billion in March 2013 as the central bank may have scaled down its foreign exchange intervention. It was softer than the reserve reduction in Feb13 which reached US$3.6bn.
Lower intervention: wider toleration of Rupiah depreciation due to fundamental factors.
Trade deficit and inflation risks have caused fundamental correction on the rupiah. Net foreign outflow was recorded in the bond market, reaching Rp3.3tn in Mar13. On average, the rupiah depreciated by 0.23% and surpassed the Rp9,700/US$ level during last month.
Yet the volatility of it is still in check.
The central bank was intervening in the market to smoothen the depreciation degree. Rupiah volatility was in a downward trend, shown from its volatility index which fell from 15.5 in February 2013 to 15.0 in March 2013.
Episodes of Rupiah weakening pressure: “to be continued”.
It will be difficult for the exchange rate to appreciate below Rp. 9,700/US$. Although food inflation is expected to level off in the next following months, concern of a pass through effect from administered prices to headline inflation remains very much alive. Moreover, rising oil product imports due to increasing subsidized fuel consumption combined with fragile global condition has also reminded the market on the external imbalance risk. The exchange rate expected to hover around Rp. 9,700/US$ to Rp. 9,900/US$.
Policy implication: FX intervention continued and FASBI rate hike remains on the table.
Against the above background, we think Bank Indonesia (BI) will continue to be in the market, albeit of lesser magnitude, to maintain rupiah volatility. We also think FASBI rate hike will be done this year at least 25bps to 4% in order to support the currency. Nevertheless, as we expect the central bank will not do anything significant about changing its stance until the next governor is officially appointed, we suspect FASBI rate will be hiked the soonest in June 2013.
We do not expect significant deterioration in Foreign Exchange reserves. Considering the reserve decline is expected to tone down ahead to tolerate further currency weakening and the central bank continues to upgrade its foreign exchange through term deposit, we hardly see that the reserve will be below the US$ 100 billion. Since the beginning of 2013, BI’s FX reserves portion from the USD term deposit continued to charge up to USD 3 billion in March 2013 from USD 2.2 billion in February 2013. Accordingly, excluding the term deposit Foreign Exchange reserves currently stand at USD 101.8 billion in March 2013.
It fell slightly by USD 0.4 billion to USD 104.8 billion in March 2013 as the central bank may have scaled down its foreign exchange intervention. It was softer than the reserve reduction in Feb13 which reached US$3.6bn.
Lower intervention: wider toleration of Rupiah depreciation due to fundamental factors.
Trade deficit and inflation risks have caused fundamental correction on the rupiah. Net foreign outflow was recorded in the bond market, reaching Rp3.3tn in Mar13. On average, the rupiah depreciated by 0.23% and surpassed the Rp9,700/US$ level during last month.
Yet the volatility of it is still in check.
The central bank was intervening in the market to smoothen the depreciation degree. Rupiah volatility was in a downward trend, shown from its volatility index which fell from 15.5 in February 2013 to 15.0 in March 2013.
Episodes of Rupiah weakening pressure: “to be continued”.
It will be difficult for the exchange rate to appreciate below Rp. 9,700/US$. Although food inflation is expected to level off in the next following months, concern of a pass through effect from administered prices to headline inflation remains very much alive. Moreover, rising oil product imports due to increasing subsidized fuel consumption combined with fragile global condition has also reminded the market on the external imbalance risk. The exchange rate expected to hover around Rp. 9,700/US$ to Rp. 9,900/US$.
Policy implication: FX intervention continued and FASBI rate hike remains on the table.
Against the above background, we think Bank Indonesia (BI) will continue to be in the market, albeit of lesser magnitude, to maintain rupiah volatility. We also think FASBI rate hike will be done this year at least 25bps to 4% in order to support the currency. Nevertheless, as we expect the central bank will not do anything significant about changing its stance until the next governor is officially appointed, we suspect FASBI rate will be hiked the soonest in June 2013.
We do not expect significant deterioration in Foreign Exchange reserves. Considering the reserve decline is expected to tone down ahead to tolerate further currency weakening and the central bank continues to upgrade its foreign exchange through term deposit, we hardly see that the reserve will be below the US$ 100 billion. Since the beginning of 2013, BI’s FX reserves portion from the USD term deposit continued to charge up to USD 3 billion in March 2013 from USD 2.2 billion in February 2013. Accordingly, excluding the term deposit Foreign Exchange reserves currently stand at USD 101.8 billion in March 2013.
Thursday, April 4, 2013
Bank Indonesia eased foreign exchange intervention
BI eased foreign exchange intervention
As indicated by the BI’s Net Foreign Asset position (consists central bank’s holding of gold, securities asset, IMF special drawing rights, and reserve fund), the degree of its reserve decline has eased compared with the Feb13 position. Based on our estimate, the FX reserves may have dropped US$0.4bn to US$104.7bn at the end of third week of Mar13, lower than the US$3.6bn decline in Feb13. This suggests that BI may have started to scale down its FX intervention especially to SOEs. Note that the decline in the reserves has included higher USD absorption through its term deposit instrument, which has increased by US$0.8bn during Mar 13.
As indicated by the BI’s Net Foreign Asset position (consists central bank’s holding of gold, securities asset, IMF special drawing rights, and reserve fund), the degree of its reserve decline has eased compared with the Feb13 position. Based on our estimate, the FX reserves may have dropped US$0.4bn to US$104.7bn at the end of third week of Mar13, lower than the US$3.6bn decline in Feb13. This suggests that BI may have started to scale down its FX intervention especially to SOEs. Note that the decline in the reserves has included higher USD absorption through its term deposit instrument, which has increased by US$0.8bn during Mar 13.
Monday, April 1, 2013
Indonesia Investment News 1 April 2013
Six banks have to improve efficiency
Bank Indonesia issued the benchmark ratio for Operating Expenses to Operating Income (BOPO), which is based on the type of banks. BUKU 1 banks (capital of
ASRI USD bond to be USD235mn at 6.95% interest
Alam Sutera disclosed today that their global bond will value USD235mn and have an interest rate of 6.95% p.a. Proceed usages as follows: 37% to pay back bank loans, 53% to pay for land acquisition from MDLN, Wisma Argo Manunggal office building acquisition, and other land acquisition, and 10% to develop residential and commercial clusters as well as for working capital. (Investor Daily)
PGAS plans to acquire 7 gas blocks in this year
PGAS allocates around US$500 mn up to US$1 bn to acuire 7 gas blocks this year. Previously in Indonesia Market Summaries, PGAS through its subsidiary PT Saka Energy Indonesia has acquired 20% participating interest in Sierra Oil Services Ltd in Ketapang Block with acquisition value of US$75mn and acquiring 30% participating interest in Bengkanai with acquisition value of US$27mn. (Kontan).
Wednesday, March 27, 2013
News For March 27 2013 in brief
The second electricity tariff increase to be effective 1 April 2013
The electricity tariff for household and industry will be raised by another 5% starting 1 Apr13 as part of 15% increase for the whole 2013. The raise will affect above 1,300VA subscribers. (Bisnis Indonesia)BII right issue
Bank Internasional Indonesia (Not rated) – will conduct a 1-for-12 rights issue at Rp320 to strengthen its capital base. A maximum total of 4.69bn new shares, representing 7.67% of the enlarged capital, will be issued to raise Rp1.5tr which will lift its total CAR to around 14.5% from 12.9% in December 2012. Maybank as the major shareholder (97.29%) will exercise their rights. Ex-date for the rights issue will be on 13 May with the rights tradable between 17 May to 23 May 2013. (Bisnis Indonesia)BNI to sell life insurance
Bank BNI is reported to sell up to 40% of BNI Life Insurance and they expect the valuation of up to US$2bn for the life insurance business (US$800m for 40%), a level that is far too high for a company with Rp2.6tr assets as of December 2012. For Indonesia Market Summaries, in addition to the sale of its life insurance business, they also plan to seek shareholders’ approval to conduct a Rp4.5tr haircut on bad debts, starting 2013, that is made possible since the constitutional court cleared the way for the state banks to restructure or sell their NPLs late last year. (Jakarta Post)Agus Martowardjojo has been chosen as governor of Bank Indonesia
The parliament finally approved Agus Martowardjojo as Governor of Bank Indonesia (BI) for 2013-2018 with a voting mechanism. 46 member voted Agus as BI Governor from total 54 votes. 7 votes rejected Agus Marto whereas 1 was abstained. (Bisnis Indonesia)
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