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14 Feb 2014
EM Central Bank Roundup: Indonesia gets some love on improved current account balance
FXStreet (London) - The Indonesian rupiah has been given a big boost thanks to a declining current account deficit helping to drag the country’s economy away from exposure to increasing emerging market volatility.
Indonesia holds rates
Indonesian central bank governor Agus Martowardojo announced yesterday that Bank Indonesia would hold its benchmark rate at 7.50 percent. It also kept the deposit facility rate and the lending facility rate unchanged at 5.50 percent and 7.50 percent, respectively. He also announced that the country’s current-account deficit in the fourth quarter of 2013 had dropped sharply to 1.98 percent of GDP.
The latest numbers show that Indonesia’s current-account deficit has been more than halved in six months after posting a deficit of 4.4 percent at the end of the first half of 2013.
Rupiah strength
The Rupiah has been one of the strongest performing emerging market currencies this year after depreciating by 13 percent in 2013 as the prospect of Fed tapering tightened liquidity positions and put pressure on Indonesia’s high levels of foreign currency-denominated debt. Data from the Indonesian finance ministry shows foreign funds bought IDR8.69 more Indonesian rupiah-denominated debt than they sold in the year to 11 February.
IDR has gained 2.9 percent against the dollar so far this year after falling 13 percent in 2013. USD/IDR is currently trading at IDR11,825, up 1.25 percent.
Russia holds rates as expected
The Central Bank of Russia joined Bank Indonesia today holding rates. The CBR held the one-week repo rate unchanged at 5.50 percent, in line with consensus expectations. However, the CBR’s stance remains dovish, giving some upside to USD/RUB. CBR chair Elvira Nabiullina revised the central bank’s forecast for the Russian economy, upward revising inflation expectations, leaving open the possibility of fate hikes if prices begin to accelerate.
Nabiullina stated that: “by the end of 2014 inflation is expected to be close to the target level amid slow economic growth.” This represents a more dovish view on inflation levels, which had previously been forecast to fall into line with the 5 percent inflation target by the end of the first half of 2014.
Consumer price index-based inflation currently stands at 6.1 percent year-on-year.
Weaker Russian growth outlook
Nabiullina pointed to disinflationary threats from a weakened Russian growth outlook further into 2014, stating that: “factors that led to acceleration of inflation at the end of 2013 are expected to exhaust their influence in the first half of 2014.”
The overall increased hawkishness of the statement helped give some support to the rouble, with USD/RUB climbing 0.9 percent to a high of RUB35.3688 before selling off to close to it’s opening. The pair is currently trading at RUB35.0865.
HUF given boost by heightened easing bets
Hungarian fourth quarter GDP beat analyst expectations, adding 0.6 percent quarter-on-quarter, down just 0.2 percent on the third quarter 0.8 percent. The fourth quarter GDP brought year-on-year growth up 2.7 percent, beating consensus expectations of a 2.5 percent growth.
The stronger GDP figures were chased by a weak January CPI print. Inflation came in pan-flat year-on-year with state price controls adding to declining domestic demand.
The weaker inflation numbers helped to lift HUF on increased expectations that the National Bank of Hungary will move to further ease monetary policy at its next meeting on 18 February in an attempt to stimulate growth. EUR/HUF dropped from pre-release highs of HUF311.80 to a low of HUF307.86.
EUR/HUF has gained 3.32 percent on the year to date.
Indonesia holds rates
Indonesian central bank governor Agus Martowardojo announced yesterday that Bank Indonesia would hold its benchmark rate at 7.50 percent. It also kept the deposit facility rate and the lending facility rate unchanged at 5.50 percent and 7.50 percent, respectively. He also announced that the country’s current-account deficit in the fourth quarter of 2013 had dropped sharply to 1.98 percent of GDP.
The latest numbers show that Indonesia’s current-account deficit has been more than halved in six months after posting a deficit of 4.4 percent at the end of the first half of 2013.
Rupiah strength
The Rupiah has been one of the strongest performing emerging market currencies this year after depreciating by 13 percent in 2013 as the prospect of Fed tapering tightened liquidity positions and put pressure on Indonesia’s high levels of foreign currency-denominated debt. Data from the Indonesian finance ministry shows foreign funds bought IDR8.69 more Indonesian rupiah-denominated debt than they sold in the year to 11 February.
IDR has gained 2.9 percent against the dollar so far this year after falling 13 percent in 2013. USD/IDR is currently trading at IDR11,825, up 1.25 percent.
Russia holds rates as expected
The Central Bank of Russia joined Bank Indonesia today holding rates. The CBR held the one-week repo rate unchanged at 5.50 percent, in line with consensus expectations. However, the CBR’s stance remains dovish, giving some upside to USD/RUB. CBR chair Elvira Nabiullina revised the central bank’s forecast for the Russian economy, upward revising inflation expectations, leaving open the possibility of fate hikes if prices begin to accelerate.
Nabiullina stated that: “by the end of 2014 inflation is expected to be close to the target level amid slow economic growth.” This represents a more dovish view on inflation levels, which had previously been forecast to fall into line with the 5 percent inflation target by the end of the first half of 2014.
Consumer price index-based inflation currently stands at 6.1 percent year-on-year.
Weaker Russian growth outlook
Nabiullina pointed to disinflationary threats from a weakened Russian growth outlook further into 2014, stating that: “factors that led to acceleration of inflation at the end of 2013 are expected to exhaust their influence in the first half of 2014.”
The overall increased hawkishness of the statement helped give some support to the rouble, with USD/RUB climbing 0.9 percent to a high of RUB35.3688 before selling off to close to it’s opening. The pair is currently trading at RUB35.0865.
HUF given boost by heightened easing bets
Hungarian fourth quarter GDP beat analyst expectations, adding 0.6 percent quarter-on-quarter, down just 0.2 percent on the third quarter 0.8 percent. The fourth quarter GDP brought year-on-year growth up 2.7 percent, beating consensus expectations of a 2.5 percent growth.
The stronger GDP figures were chased by a weak January CPI print. Inflation came in pan-flat year-on-year with state price controls adding to declining domestic demand.
The weaker inflation numbers helped to lift HUF on increased expectations that the National Bank of Hungary will move to further ease monetary policy at its next meeting on 18 February in an attempt to stimulate growth. EUR/HUF dropped from pre-release highs of HUF311.80 to a low of HUF307.86.
EUR/HUF has gained 3.32 percent on the year to date.