TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Domestic bond market weakens as investors anticipate FOMC meeting
Change Size
Stock brokers monitor the trading activities of bonds and other debt papers at a dealing room at Treasury Bank Rakyat Indonesia in Jakarta. (kompas.com/Hendra A Setyawan )
C
oncern about the projected increase of the Federal Reserve’s key reference has not only affected Indonesia's currency, but also the Indonesian bond market.
The Indonesia Composite Bond Index (ICBI) weakened by 1.2 percent in February to 242.50, the lowest level this year.
Capital Asset Management fund manager Desmon Silitonga agreed that the pressure on the domestic bond market was caused by investors, who were still anticipating a decision to be made at the Federal Open Market Committee (FOMC) meeting this month.
He said market players believed the Fed would increase the key reference rate at its March 21 meeting. “It is possible that the Fed fund rate will increase four times this year,” said Desmon in Jakarta on Thursday as reported by kontan.co.id.
Securities firm Samuel Sekuritas Indonesia economist Ahmad Mikail added that the improvement of the US economy had caused the increase in the US Treasury’s yield, which had affected the yield of global state debt papers.
It affects the stability of the bond market and the rupiah exchange rate because investors are likely to withdraw their funds from the market.
This was also indicated by data from the Finance Ministry's financing management and risk directorate general that shows that in February foreign ownership of government debt papers (SBN) declined by Rp 21.55 trillion (US$1.51 billion) to Rp 848.22 trillion, although fundamentally, the Indonesian economy remains quite strong.
Meanwhile Bank Indonesia said it was also preparing measures to defend the rupiah, which was quoted at Rp 13,800 against the US dollar on Thursday morning before finishing at Rp 13,748 by market close. (bbn)
