Jakarta, CNBC Indonesia – The pressure is coming from outside. After the Omicron variant of the corona virus, now negative sentiment comes from the Chair of the United States Central Bank (US) aka The Fed which has made the Indonesian capital market powerless again in early December.
On Wednesday (1/12/2021), the Composite Stock Price Index (JCI) weakened again, after having strengthened at the beginning of the trading session. Meanwhile, the rupiah has not strengthened against the dollar for eight days, the details are six times weakened and two times stagnant.
According to data from the Indonesia Stock Exchange (IDX), the JCI closed down 0.40% to 6,507.68. This continued the 1.13% decline experienced in Tuesday’s trading (11/30/2021).
Wednesday’s trading data noted that 174 stocks rose, 371 stocks fell and 122 were stagnant. The transaction value almost penetrated Rp. 16.09 trillion and foreign net sells to Rp. 559.42 billion in the regular market.
JCI actually weakened when the majority of major Asian stock markets rose. Japan’s Nikkei Index closed up 0.41% at 27,935.62, Hong Kong’s Hang Seng rose 0.78% to 23,658.92.
Then, China’s Shanghai Composite Index added 0.36% to 3,576.89. Singapore’s Straits Times jumped 1.87% to 3,098.25, and South Korea’s KOSPI soared 2.14% to 2,899.72.
Meanwhile, according to data from Refinitiv, on Wednesday, the rupiah opened trading with a weakening of 0.09%, and swelled by 0.28% to Rp. 14,360/US$. After that, the rupiah managed to cut its weakness to end at Rp 14,340/US$.
Earlier, Fed Chair Jerome Powell said he could speed up the pace of tapering or a reduction in the value of the asset purchase program (quantitative easing/ QE).
“Currently the economy is very strong and inflation is also very high, therefore in my view it would be appropriate to consider completing tapering sooner, maybe a few months earlier, “Powell said before the U.S. Senate, as reported CNBC International, Tuesday (30/11).
The Fed is tapering US$ 15 billion every month starting last November. With a QE value of US$ 120 billion, it took eight months to complete. This means that the tapering will end in June next year.
The market is still calm in responding tapering During this period, there was no turmoil in the financial market as in 2013, which was called taper tantrum. The reason is that Powell has given an indication that he will do this tapering since the beginning of this year, so the market is more prepared. The rupiah was still able to strengthen when the tapering started last month.
However, acceleration tapering be a surprise to the market that risks causing turmoil. Especially when tapering accelerated, there is a chance the Fed will also raise interest rates earlier.
Several elite Fed officials in recent weeks have pushed a lot to accelerate the pace tapering. But Powell is not expected to behawkish that. In fact, Powell also behaved the same way, which took market participants by surprise.
“Everyone was shocked by the attitude Powell became hawkish. The Fed is now likely to raise rates more aggressively,” said Edward Moya, senior market analyst at OANDA CNBC Internationa.
Meanwhile from within the country there is some good news. The Central Statistics Agency (BPS) yesterday reported Indonesia’s inflation figures for the November 2021 period. The results were not far from market expectations.
Head of BPS Margo Yuwono revealed that inflation was 0.37% in November 2021 compared to the previous month (month-to-month/mtm). Compared to November 2020 (year-on-year/yoy), the inflation rate is 1.75%.
The market consensus compiled by CNBC Indonesia predicts monthly inflation of 0.31%. Meanwhile, annual inflation is estimated at 1.7%.
In addition, BPS also reported that core inflation grew 1.44% yoy, higher than the previous month’s 1.33%. Core inflation contains a group of goods and services whose prices are difficult to fluctuate and are persistent.
An increase in core inflation could be an indication of improving public purchasing power. This gave a positive sentiment to the rupiah which enabled it to reduce its weakness.
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