"However, we must remain vigilant, as the global economy still faces uncertainty. The US-China trade tensions are expected to continue and also lead to a currency war," Santoso noted in Jakarta on Monday (Aug 12).
In the midst of the global economic uncertainty, the Indonesia Composite Index (IHSG) still managed to record a positive performance on Friday, Aug 9, up 1.41 percent year-to-date (ytd) and the average yield of government securities (SBN) still dropped 69 basis points.
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This condition is certainly supported by our macroeconomic conditions that are still strong, with economic growth that can be maintained above five percent; low inflation maintained in July, at 3.32 percent yoy; and foreign exchange reserves also continue to grow, at US$125.9 billion in July.
As of the end of last week, net foreign buying in the stock market was quite high, at Rp64.9 trillion ytd and at Rp113.4 trillion ytd in the SBN market.
Meanwhile, as of the end of last week, fundraising from the capital market was quite good, reaching Rp109.2 trillion with 29 new-listed companies, while the total investment had reached Rp802.4 trillion, or grew 7.2 percent ytd.
"The current condition of the trade war will affect global economic growth and international trade. Thus, several countries, including Indonesia, conduct rate cuts," Santoso remarked.
He stated that various countries have realized the impact of the trade war. Countries that lowered their benchmark interest rates comprised India that lowered 35 basis points, New Zealand reduced its benchmark interest rate to the lowest in history, Thailand lowered its benchmark interest rate, and Bank Indonesia lowered its benchmark interest rate as well as eased primary reserve requirement (GWM).
"This indicates that the challenge of the global economic slowdown continues to affect the development of the domestic economy and the performance of our capital markets in future. Thus, we must respond to the conditions quickly and accurately," Santoso emphasized. Related news: BI necessitates ETP on money market to meet capital requirements
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Translator: Citro Atmoko / Azis Kurmala
Editor: Fardah Assegaf
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