|Bid||7.11 x 47300|
|Ask||7.12 x 45100|
|Day's Range||7.05 - 7.12|
|52 Week Range||4.52 - 12.44|
|Beta (5Y Monthly)||1.77|
|PE Ratio (TTM)||5.36|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Aug 09, 2019|
|1y Target Est||9.10|
(Bloomberg) -- Bank Indonesia lowered its key interest rate for a second straight month to bolster economic growth, and signaled further easing will depend on inflation and how the recovery from the coronavirus pandemic unfolds.The central bank cut its seven-day reverse repurchase rate by 25 basis points to 4%, the lowest since the current rate system was adopted in 2016, as predicted by 18 of 30 economists surveyed by Bloomberg. One expected a 50 basis-point cut, while 11 forecast the bank to hold rates steady.Bank Indonesia has been one of the more aggressive central banks in Asia, cutting rates four times this year and pledging to buy billions of dollars of government bonds to help finance the budget deficit. The central bank expects the economy to grow just 0.9%-1.9% this year, and inflation has slumped to a two-decade low as the pandemic has crippled businesses and rendered millions of people jobless.“This decision is consistent with inflation forecasts that remain low, maintained external stability and as a further step to encourage economic recovery in the Covid-19 pandemic,” Governor Perry Warjiyo said in his briefing. “Bank Indonesia, through its policy mix, will continue to strengthen synergies with the government and related authorities so that various policies pursued will be more effective in encouraging economic recovery.”The rupiah weakened as much as 0.7% before paring losses to end at 14,625 to the dollar, its weakest closing level since May 28, according to data compiled by Bloomberg. The Jakarta Composite Index rose 0.4% to close at 5,098.374, while the yield on benchmark 10-year government bonds fell 4 basis points to 7.033%.The rate cut may weigh on the rupiah, which has rebounded about 12% against the dollar since hitting a 22-year low in March but has been the worst performer in Asia over the past month. Warjiyo said Thursday the currency has been pressured by global uncertainty, is undervalued and has room to appreciate.The rupiah “may be susceptible in the near term during bouts of market uncertainty” after Thursday’s cut, said Nicholas Mapa, senior economist at ING Groep NV in Manila. If second-quarter gross domestic product is in line with expectations, “we can expect Warjiyo to focus on rupiah stability” at the August rate meeting.A spurt in coronavirus cases across the archipelago has clouded the timeline for resuming normal economic activity and weighed on household consumption, which makes up almost 60% of Indonesia’s economy. Warjiyo said on an investor call later Thursday that the economy probably contracted 4% in the March-June quarter.“The clear implication of today’s cut is that BI remains focused on growth rather than currency risks,” said Joseph Incalcaterra, HSBC’s chief Asean economist in Hong Kong. “We believe a more cautious and gradual pace of rate cuts in the coming quarters can help assuage concerns about currency risks” stemming from the bank’s quantitative easing program.Watching InflationWarjiyo said further cuts will depend on inflationary pressures, but noted that buying bonds and ensuring liquidity can be more effective in reviving the economy.The central bank has said the outlook for the current-account deficit, a perennial weakness for Indonesia’s economy, is improving, with the country posting a trade surplus of more than $5 billion in the first half of the year and foreign investors being net buyers of government bonds in the past three months. The current-account deficit for the year is expected to be around 1.5% of gross domestic product, Warjiyo said.Other key points from Warjiyo’s briefing and the investor call:The impact of the pandemic appears to have peaked in the second quarter, when the economy contracted, with activity picking up again starting in JuneThe pace of recovery in the third quarter will depend on how quickly the government can disburse stimulus and the banking system can restructure debtsThe bank maintained its inflation forecast for the year at 2%-4%, and sees the same range in 2021The bank also lowered the deposit facility rate by 25 basis points to 3.25%Deputy Governor Dody Budi Waluyo said that as part of Bank Indonesia’s agreement with the government, the central bank will share the interest cost on five-year bonds to help corporates and on seven-year bonds to assist small- and medium-sized enterprises (Adds analyst quote in seventh paragraph, final bullet point)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.K. now offers lower returns on its debt than its Japanese peers, the latest sign investors are betting on further interest-rate cuts to stave off a deep recession.The yield on the U.K.’s two-year bonds declined to an all-time low of minus 0.129%, inverting the spread between the nations’ securities for the first time on record, based on generic benchmark rates. The gaps on five- and 30-year bonds aren’t far off zero.That comes after U.K. growth figures for May missed estimates on Tuesday, showing the economy’s struggle to recover from the coronavirus lockdown and driving investors into havens such as gilts. Meanwhile, shorter-dated Japanese bonds have been backstopped by the country’s central bank, keeping yields steady.“Unlike Japan, we don’t really know where the bottom is for GBP rates,” said Antoine Bouvet, a rates strategist at ING Groep NV. “Granted we are still some months away from a potential decision to slash interest rates below zero but if the euro zone or Switzerland is the template, then there is potential for GBP rates to go much lower than their JPY counterparts.”British Bond Traders Might Find BOE Wants to Take Back ControlThe Office for Budget Responsibility sees the nation’s budget deficit widening to as much as 21% of gross domestic product, according to a report published Tuesday. The economy may shrink by at least 10% this year, and as much as 14.3% if the OBR’s worst-case scenario pans out.BOE WarningThe moves show that European debt markets may be undergoing “Japanification,” a world of low yields, tepid inflation and little volatility. Some bond traders are speculating that the Bank of England could also follow its Japanese equivalent in trying to limit borrowing costs via so called yield-curve control.“This development signifies that while Japan has long been at the vanguard of unconventional policy making, it has been a harbinger of things to come rather than an outlier,” said Richard McGuire, the head of rates strategy at Rabobank in London. “We have argued for some time that Japanification has been underway in the West.”Other market indicators have also flashed signals that the BOE could follow Japan’s crisis policy making. Rate futures tied to three-month sterling Libor traded above 100 for the first time last week, hinting at negative rates by March 2022. A day earlier, the rate banks use to lend to each other dropped below the BOE’s benchmark, a move that often precedes a rate cut.BOE Governor Andrew Bailey fueled the debate further by warning lenders last month of the challenges negative interest rates would bring. He’ll address lawmakers from the U.K.’s ruling Conservative Party on Wednesday, where he may be asked about the consequences.Trading hours for both nations’ debt only coincide for an hour between 8 a.m. and 9 a.m. London time.(Adds quote in the seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.