9 Apr 2014
Asia EM Express: Bank Indonesia keeps rates steady in April
FXStreet (Łódź) - Bank Indonesia held its monetary policy meeting on Tuesday, during it which it kept the reference rate steady at 7.5% for the fifth running month. In the statement published following the interest rate announcement the central bank suggested this level was appropriate for meeting its inflation target of 3.5%–5.5% this year and of 3.0%–5.0% in 2015.
The current policy stance is also supporting the efforts to bring down the current account deficit, BI said. It added that despite the fact that recently trade balance shifted to surplus and inflation started slowing down risks remain to Indonesia's macroeconomic stability. That's why the central bank expects growth to remain in the 5.5-5.9% range this year.
Indonesia's external sector's strong performance has benefited the rupiah and boosted FX reserves, the BI remarked.
According to Jacqui Douglas, Senior Global Strategist at TD Securities: “As IDR remains on a strengthening trajectory for now, our call for a final 25bp hike in late Q2 or Q3 is losing conviction. For the time being, the two major threats to price stability seem to be potential food price shocks and administered price hikes, in the absence of which our call for tighter rates may soon become obsolete.”
Economic data
South Korea informed on Tuesday that the number of unemployed workers in the economy was at 3.5% in March, down from 3.9% in February and below projections of a slide to 3.7%.
Tim Condon, Head of Research-Asia at ING adds that “the labour force participation rate (SA) retraced the February spike, falling to 62.4 in March, which puts it close to January’s 62.3 and well above the 61.5 average for 2013. The labour market is signaling a strong start to 2014, which is at odds with the message from exports.”
Technicals
The Indonesian rupiah strengthened on Tuesday following the BI's decision and ahead of parliamentary elections which kick off today.
The USD/IDR fell by 0.02% to 11285.00. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index oversold. RSI was at 31 at the last close. The Daily 2-StDev Volatility Bandwidth was shrinking at 57.5691, with ATR (14) shrinking at83.4133. The 1D 200 SMA was at 11,387.17, while the 1D 20 EMA was at 11,396.80.
The current policy stance is also supporting the efforts to bring down the current account deficit, BI said. It added that despite the fact that recently trade balance shifted to surplus and inflation started slowing down risks remain to Indonesia's macroeconomic stability. That's why the central bank expects growth to remain in the 5.5-5.9% range this year.
Indonesia's external sector's strong performance has benefited the rupiah and boosted FX reserves, the BI remarked.
According to Jacqui Douglas, Senior Global Strategist at TD Securities: “As IDR remains on a strengthening trajectory for now, our call for a final 25bp hike in late Q2 or Q3 is losing conviction. For the time being, the two major threats to price stability seem to be potential food price shocks and administered price hikes, in the absence of which our call for tighter rates may soon become obsolete.”
Economic data
South Korea informed on Tuesday that the number of unemployed workers in the economy was at 3.5% in March, down from 3.9% in February and below projections of a slide to 3.7%.
Tim Condon, Head of Research-Asia at ING adds that “the labour force participation rate (SA) retraced the February spike, falling to 62.4 in March, which puts it close to January’s 62.3 and well above the 61.5 average for 2013. The labour market is signaling a strong start to 2014, which is at odds with the message from exports.”
Technicals
The Indonesian rupiah strengthened on Tuesday following the BI's decision and ahead of parliamentary elections which kick off today.
The USD/IDR fell by 0.02% to 11285.00. The daily FXStreet Trend Index was slightly bearish, and the OB/OS Index oversold. RSI was at 31 at the last close. The Daily 2-StDev Volatility Bandwidth was shrinking at 57.5691, with ATR (14) shrinking at83.4133. The 1D 200 SMA was at 11,387.17, while the 1D 20 EMA was at 11,396.80.