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​​​Communication Department
6/5/2020 9:00 AM
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Latest Economic Developments and BI Measures against COVID-19 (5th June 2020)

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Monitoring economic conditions in Indonesia, especially in terms of the COVID-19 impact, Bank Indonesia Governor, Perry Warjiyo, announced two recent developments on Friday (05/06) concerning the latest economic indicators and policy measures instituted by Bank Indonesia as follows:
A.    Latest Economic Indicators
1.     The rupiah remains fundamentally undervalued and is expected to appreciate.
The rupiah today (05/06) broke through the Rp14,000 per US dollar level, trading at Rp13,855 per US dollar to buy and Rp13,960 per dollar to sell.  The stronger rupiah was consistent with prevailing opinion that the currency is fundamentally undervalued and will continue to strengthen moving forward, influenced by:
a.     Low and controlled inflation;
b.     Narrow current account deficit;
c.     Wide yield spread;
10-year SBN yield in Indonesia is 7.06%, while 10-year UST Note yield is 0.8%, giving a yield spread of 6.2%.
d.     Indonesia’s risk premium has begun to decrease but not to pre-COVID-19 levels.
Indonesia’s 5-year CDS premium decreased to a level of 126.78bps on 4th June 2020 yet remains above the 66-68bps range recorded prior to COVID-19.  Post pandemic, Indonesia’s CDS premium is expected to decline and support rupiah appreciation.
 
2.     Inflation Remains Low
Low Consumer Price Index (CPI) inflation was recorded in May 2020 at 0.07% (mtm), or 2.19% (yoy) annually.  Based on the latest Price Monitoring Survey released in the first week of June 2020, lower inflation in June is predicted at 0.04% (mtm), or 1.81% (yoy).  Low inflation stems from:
a.     Slower demand due to the COVID-19 pandemic, including private income and consumption.
b.     Uninterrupted supply and smooth distribution of goods and services supported by close coordination between Bank Indonesia and the central and local governments.
c.     Policy credibility, as indicated by anchored inflation expectations.
 
3.     Foreign capital inflows have increased since the second week of May 2020.
Foreign investor confidence in economic conditions in Indonesia is improving, signalled by an influx of foreign capital flows to government securities (SBN) since the second week of May 2020.  Net inflows totalling Rp2.97 trillion, Rp6.15 trillion, Rp2.5 trillion and Rp7.01 trillion were recorded in the second, third and fourth weeks of May 2020 as well as the first week of June 2020 respectively.
 
4.     The position of reserve assets increased at the end of May 2020.
The position of reserve assets has continued to rise, with the position at the end of May 2020 expected to exceed that recorded in April 2020.
 
5.     SBN purchases by Bank Indonesia in the primary market in accordance with Act No. 2 of 2020.
Bank Indonesia has pared back SBN purchases in the primary market, thus demonstrating stronger market capacity to purchase SBN and finance the State Revenue and Expenditure Budget (APBN).
a.     SBSN purchases by Bank Indonesia
·         21-22 April 2020:         Rp4.65 trillion
·         5-8 May 2020:              Rp7.3 trillion, including private placements totalling Rp3.67 trillion.
·         18 May 2020:               Rp1.17 trillion
b.     SUN purchases by Bank Indonesia
·         28-29 April 2020:         9.07 trillion
·         12 May 2020:               1.77 trillion
·         First Week of June 2020:           Rp2.09 trillion
 
B.    BI Measures to support New Normal Policy
1.     Implement and safeguard the central bank functions relating to the banking industry, payment system and financial market, while cooperating with the industry to ensure monetary, financial and payment system activities run smoothly and securely to support economic activity.
2.     Comply with protocols put in place by the central and local governments.  COVID-19 pandemic containment protocols are critical from a humanitarian aspect and to support economic activity.  The protocols are implemented in accordance with the local requirements in each region.
3.     Prepare protocols for task implementation at Bank Indonesia and other relevant industries.  All essential tasks and functions at Bank Indonesia will be maintained through a split operation mechanism, while following strict health and hygiene protocols for the payment system, currency in circulation, money market and foreign exchange market.  For non-essential tasks, the number of employees working from home or in the office will be adjusted gradually.
 
Bank Indonesia is confident that implementation of the New Normal will stimulate economic activity and increase private income.  National economic growth in Indonesia is expected to moderate in the second quarter of 2020 before regaining upward momentum in the third quarter of 2020.  Meanwhile, the economic growth projection for Indonesia in 2020 will be reviewed based on the latest data available.
 
Additionally, Bank Indonesia will continue to strengthen coordination with the Government and Indonesian Financial Services Authority (OJK) to carefully monitor the chain of COVID-19 transmission and the economic impact over time, including the coordinated policy measures required to maintain macroeconomic and financial system stability, while supporting solid and resilient economic growth.
 
Head of Communication Department
Onny Widjanarko
Executive Director
 
Information about Bank Indonesia
Tel. 021-131, Email: bicara@bi.go.id
 

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​​​Contact Center BICARA : 1500-131 e-mail : bicara@bi.go.id
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Halaman ini terakhir diperbarui 9/21/2020 8:58 PM
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