INDONESIA: IDR Underperforms After BI Rate Cut, Uncertainty On Budget Def. Cap
Sep-19 09:22
- The Indonesian rupiah has underperformed this week, falling 1.3% against the US dollar, following the surprise 25bp BI rate cut and amid news that lawmakers will review the law that sets limits on the budget deficit and public debt levels.
- USDIDR has risen a further 0.5% to 16588 on Friday, bringing the pair to a four-month high. Lawmakers are said to be reviewing the State Finance Law that caps the budget deficit at 3% of GDP and overall public debt at 60% of GDP.
- New Finance Minister Purbaya Yudhi Sadewa has said he will keep the 2026 budget deficit well below the ceiling, with the figure yesterday put at 2.68% of GDP for next year (up from an initial 2.48% estimate). According to Bloomberg, however, he said today that the current budget cap is arbitrary and potentially outdated.
- Meanwhile, following the BI rate cut to 4.75% this week, analysts see scope for another 50bp of easing this year as the central bank has become more focussed on growth than FX developments, amid concern about the global backdrop. Meanwhile, reports that lawmakers are weighing changes to BI’s mandate have also raised concerns about the central bank’s independence.
- For USDIDR, sights are on the 16600-level next, ahead of April highs for the pair close to 17000.
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GREECE T-BILL AUCTION RESULTS: 26-week GTB
Aug-20 09:20
| Type | 26-week GTB |
| Maturity | Feb 20, 2026 |
| Amount | E500mln |
| Target | E500mln |
| Previous | E500mln |
| Avg yield | 1.74% |
| Previous | 1.71% |
| Bid-to-cover | 1.84x |
| Previous | 1.93x |
| Previous date | Jul 23, 2025 |
RIKSBANK: Thedeen Stresses That Weak Outlook Was Taken Into Account In August
Aug-20 09:16
Q: Why haven’t you cut rates today?
A: If we were completely focuses on inflation, we may have had to consider a hike. But we are not. We also take the economic situation into account, which remains weak. We continue to think inflation is on its way down to 2%.
- Future rate decisions will depend on the data. The June rate path assumed a ~50% probability of another cut. I don’t want to point to specific meetings.
RIKSBANK: Uncertainty Has Increased Household's Propensity To Save
Aug-20 09:10
Thedeen on the economic outlook: Positive real wages should start to support consumption going forward, but we think high uncertainty has caused households to save, rather than consume, so far this year.
- Åsa Olli Segendorf, Head of the Monetary Policy, highlights that households are less pessimistic on their own economic situation than earlier this year.
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