Indonesia: BI rate hike has insignificant effect on rupiah, stock market

• May 18, 2018

Bank Indonesia’s (BI) decision to raise its reference rate by 25 basis points on Thursday has had almost no effect on either the rupiah exchange rate or the stock market.

On Friday morning, the rupiah weakened by 0.63 percent to Rp 14,134 against the US dollar, according to Bloomberg.

Other regional currencies also weakened against the US dollar but not as much as the rupiah, with the Singaporean dollar and the Thai baht weakening by 0.03 percent and 0.19 percent, respectively.

The rupiah was relatively weaker against all major and regional currencies, even weakening by 0.80 percent to Rp 16,696 against the euro.

The stock market was green during Friday morning trading, but not by much. The Jakarta Composite Index (JCI) increased by 0.29 percent to 5,832.35, while major stocks in the LQ45 index saw a 0.35 percent increase.

The central bank raised its 7-day reverse repo rate ( 7DRRR ) on Thursday as it sought to maintain stability amid lingering external pressures. BI raised its 7DRRR by 25 basis points (bps) to 4.50 percent, while it also raised the lending and deposit facility rates  by 25 bps to 5.25 and 3.75 percent, respectively.

Earlier, many analysts, including Ashmore Asset Management Indonesia director Arief Wana and CIMB Niaga chief economist Adrian Panggabean, had suggested a hike of 50 bps. (bbn)

Source: http://www.thejakartapost.com/news/2018/05/18/bi-rate-hike-has-insignificant-effect-on-rupiah-stock-market.html