The 10-year SUN yield fell 3.8 bps to 6.91%, in line with the strengthening of rupiah exchange rate. Market players responded positively to Indonesia’s foreign exchange reserves (cadev) at the end of August 2020 amounting to USD 137 billion, an increase compared to the previous month of USD 135.1 billion.
Investors are still responding to the independence of BI, after the existence of a monetary board chaired by the Minister of Finance.
Pressure is still on bond prices in all tenors. The government’s plan to revise the Bank Indonesia Law will affect the independence of BI.
The price of government bonds weakened at the close of trading Wednesday, almost occurring in all tenors.
Low demand for the public, made August inflation at a minus level (deflation) of 0.05%. Public demand has decreased due to the Covid-19 outbreak.
Allowance for impairment losses, which increased the provision fee up to 88.2% YoY, pushed down BBNI’s net profit by 41.6% YoY or to IDR 4.5 trillion in the 1H20 period.
CDS decline is in line with the improvement in the 2Q20 current account deficit worth USD 2.9 billion or equivalent to 1.2% of GDP.
This has made the 3Q20 national economy still shadowed by contraction. All SUN series saw yield increases, even for 30-year tenors, which saw yield decline.
SUN prices were under pressure on Thursday (27/08) trading. In addition to the GDP for the 3Q20 period which is projected to be still negative, market players have responded negatively amid the record positive cases of Covid-19.
