Indonesia Macro Update - BI7DRR Update 22 Dec 2023
KBVS MACRO UPDATE
Friday, 22 December 2023
BI-Rate Maintained at 6.00%: Remain Focus on Rupiah Stabilization
Bank Indonesia (BI) has decided to maintain the BI 7-Day Reverse Repo Rate (hereafter referred to as the BI-rate) at 6.00% (Cons: 6.00%, KBVS: 6.00%, Prev: 6.00%). We perceive this stance as continuing support to the attractiveness of the domestic portfolio and maintaining Rupiah stability. This trend is also supported by the effective implementation of various instruments introduced by BI in the form of SRBI, SVBI, and SUVBI.
On the other hand, the possibility of a Fed Rate reduction in 2024 could alleviate uncertainty in the global financial markets. Furthermore, we view these conducive global conditions as potentially maintaining Rupiah stability. Moreover, with anticipated controlled inflation, we foresee this prompting BI for a potentially quicker decrease in 2024 compared to the Fed. However, the ongoing presidential and legislative elections are expected not to disrupt economic stability. Instead, they are anticipated to drive economic growth through consumer demand.
Nonetheless, we believe this condition might still prompt a wait-and-see approach in the financial markets, presenting an opportunity to acquire SUN perceived as more affordable, with our preference lying in SUNs with tenures ranging from 12 years to 17 years.
Regards,
Fikri C Permana - KBVS Research Team