November 2015 3rd Week

23 november 2015

Categories : IR Weekly Review


  • MACRO
      • IMF Managing Director Christine Lagarde announced on the weekend that she recommended China's currency to be included in the currency basket of Special Drawing Rights (SDR), in addition to USD, euro, poundsterling and yen. The recommendation made the main shareholder of the IMF including the United States would support the inclusion if the yuan met the criteria of the institution located in Washington. According to Lagarde, she would lead the IMF board of directors meeting on upcoming 30 November. One of the main agendas was to consider the inclusion of the yuan into the SDR basket. Indeed earlier, Beijing continued to encourage the yuan could go into the basket of the IMF. This was part of China's long-term strategic goal to reduce its dependence on the US dollar. This would boost the demand for the yuan in the world's financial markets and became a symbol for China as the country with the world's second largest economy. If the IMF agreed to this, the inclusion of the yuan to the SDR basket would apply effectively in October 2016. Thus, Beijing will have time to prepare.
      • The dollar weakened against other major currencies in New York trading on Thursday (Friday morning GMT, 20/11/2015), after rising to the highest level in seven months in the two previous sessions. The greenback has been strongly supported by market expectations for a rate hike at the end of the year. In the previous session, the minutes of a Federal Reserve meeting in October showed that the majority of the FED officials agreed that "might be appropriate" to raise interest rates in the next policy meeting in December. Xinhua reported, the dollar index, which measured the greenback against six major currencies, was recorded 99.598 at the end of trading on Wednesday, the highest level since April. The index retreated from 0.68 percent to 98.975 in late trading on Thursday. On the economic front, the US Labor Department reported on Thursday that in the week that ended on Nov. 14, preliminary figures for initial jobless claims seasonally adjusted reached 271,000, decreased 5,000 from the previous week's revised level. In late trading in New York, the euro rose to 1.0733 dollars from 1.0647 dollars in the previous session, and the British pound rose to 1.5291 dollars from 1.5227 dollars in the previous session. The Australian dollar firmed to 0.7193 dollars from 0.7091 dollars. The US dollar were bought 122.83  Japanese yen, lower from 123.55 yen from the previous session. The US dollar fell to 1.0130 Swiss francs from 1.0196 Swiss francs, and fell to 1.3291 Canadian dollars from 1.3338 Canadian dollars.
      • Reviews :
        The impact of the Fed Rate’s increase is the interest of both loans and deposits in banks and other financial institutions can also ride. If the deposit rates in banks in the United States rise, then interest bonds that were issued by the companies in the United States will also go up. It will attract investors worldwide to put their funds in the US market, which impact the flight of investment from domestic to overseas.
  • MICRO
      • Senior Governor Deputy of Bank Indonesia Adityaswara Mirza believes Indonesia's balance of payments in 2016 will return a surplus, after in 2015 being estimated deficit around 5-6 billion US dollar. At an economic exposure and capital markets in 2016 on Thursday, Mirza explaines deficit of the balance of payments this year is still  triggered by deficit of exports and imports of goods / services flows, as well as the imbalance between outflows and inflows. "Because the sales portfolio, stock, bond, so that the overall balance of payments deficit in this year, approximately 5-6 billion dollars," said Mirza. Nonetheless, by performing the structural improvement of the economy that is running at the moment, Mirza believes the balance of payments, which includes the current account and financial account balance will record a surplus as in 2014, at which at that time it recorded a surplus of 15 billion US dollars. Mirza gave a signal after the current account was improved, the inflation rate would also be more restrained. Therefore, the opportunities of monetary authorities to lower the benchmark interest rate (BI rate) was also wide open.
      • The Financial Services Authority (OJK) announces the six stimulus of national economic growth and the the increase in the supply of foreign exchange in the financial services sector. Chairman of the Board of Commissioners OJK Muliaman D Hadad on Wednesday, said that the six stimulus that included relaxation of provision requirement business activities such as bank management and deposit, designing agriculture insurance scheme, the revitalization of venture capital. Besides, the establishment of industrial financing consortium oriented export, creative economy, small and medium micro enterprisesm and the union. OJK also announces the efforts to empower Indonesian Export Financing Agency and affirmation implementation of "one project concept" in the determination of credit quality. Related to relaxation of provision requirement business activities such as bank management and deposit, Hadad said as an effort to support the continued stimulus policies and improve the bank's ability to manage foreign exchange primarily as a continuation of previous policies related to the management of foreign exchange export results, the need for policies to improve the ability of banks in managing funds owned by the economic actors, especially the large amounts in foreign currencies.
      • Reviews :
        In solving the problems of economic slowdown, the government should implement the fiscal and monetary policy at the same time as economic activities such as household sector, the corporate sector, the government sector and the international sector / overseas are mutually affected one another.
  • BANKING
      • President Director of PT Bank Rakyat Indonesia (Persero) Tbk, Asmawi Syam stated that the monetary policy that was formulated by Bank Indonesia (BI) to lower the minimum statutory reserves from 8% to 7.5% would increase the liquidity of the company. He said that, with the increasing liquidity of the company, the credit would be more lax. "The statutory reserves decrease means our liquidity increases. Total liquidity loan increases, means we loose lending. It is a real effect," he told Sindonews in Jakarta, Wednesday (11/18/2015). In addition, the monetary policy wiould also reduce the company's cost of funds. "If I pay the deposit that can be used for credit, if 8% is taken right away, it leaves 92% and now 92.5%. That means there is a 0.5% times the total deposits in the banks across Indonesia," he said. According to him, reduction in the statutory reserves did not only affect on credit alone. However, the effect would be more pronounced against the bank’s leeway for greater expansion. "Not only to credit, but that 7% I can not lend all must be retained. Liquidity  reduces the lending but not directly. But it gives leeway to the expansion of larger banks. Some want to borrow a larger loan," he concluded.
      • PT Bank Negara Indonesia Persero Tbk continues to empower and foster the creative industry businesses and tourism through the program "Kampoeng BNI" in various regions in Indonesia. It is to improve their welfare and the surrounding communities. Deputy Director of BNI Suprajarto, Friday (11/20/2015) said the company has established 31 "Kampoeng BNI" in various regions in Indonesia, while in the next year would be estimated to increase the number of target coaching to be not less than 10 "Kampoeng BNI". He mentioned some criteria for development "Kampoeng BNI”, which stressed to the creative industries and tourism or other potential that can develop social welfare and the production enhancement of business actors. It will also use the media in a network to follow up the program development "Kampoeng BNI" in the future in line with the implementation of e-commerce banking.
      • Reviews :
        In the process of Indonesia economic recovery, the Small Medium Enterprises (UMKM) sector has a strategic and important role that can be viewed from various aspects, for the vast amount of industries and discovered in every economic sector. The synergy between the Bank and the UMKM actors should be further improved to achieve progress together.

Disclaimer : This document is for informational purposes only and obtained from a variety of reliable sources, but is not a guarantee the accuracy or completeness and should not be relied on completely. The above conditions may be changed at any time. Forbidden to rewrite anything without written permission from The East Java Regional Development Banks