Fixed Income Update 20 Feb 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 20 February 2025
The Decline in Global Geopolitical Risks
The prospect of peace between Russia and Ukraine is expected to have an immediate positive impact by reducing geopolitical risks and lowering global investment uncertainties.
However, concerns over Trump Tariffs, along with their implications for global inflation and economic growth, remain a key issue to monitor. This aligns with Powell’s statement emphasizing the need for caution and the Fed’s stance of “no rush to cut interest rates,” as reflected in the FOMC Minutes from January.
Meanwhile, the increase in Indonesia’s trade balance in January 2025, extending the country’s 57-month consecutive trade surplus, is anticipated to reinforce domestic economic stability. This outlook is further supported by the upcoming implementation of new regulations on export proceeds from natural resources (DHE SDA), set to take effect on Mar 1, ‘25.
Bank Indonesia has also anticipated these developments by diversifying instruments for DHE placement, which not only enhances liquidity access for exporters and the banking sector but also complements the central bank’s decision to maintain the BI rate at 5.75%.
Regards,
KBVS Research Team