Trade surplus narrowed from USD3.26 bn in Jul-20 to USD2.37 bn in Aug-20. The surplus is lower than our estimation at USD2.94 bn but higher than consensus estimates at USD2.17 bn.
At the end of Aug-20, the House of Representatives (DPR) has prepared a draft of the Revision of Law number 23 of 1999 concerning Bank Indonesia (BI).
Statistics Indonesia (BPS) recorded deflation at 0.05% MoM although in yearly basis the inflation still occured at 1.32% YoY in Aug-20.
Lower inflation, bigger trade surplus and narrowing current account deficit (CAD) provide BI room to have a rate cut but we believe maintaining the rate unchanged is wise until the demand side is able to respond it better.
Jul-20 trade surplus was recorded as the second highest surplus at USD3.26 bn from the highest surplus at USD3.57 bn in Aug-11.
The low era of inflation is associated with current unusual situation where households tend to save more in order to avoid uncertainty in the near future due to the pandemic.
Bank Indonesia (BI) today delivered its fourth rate cut on benchmark interest rate by 25bps to 4.0%, which is the lowest in two years andaligned with our and consensus expectations.
The JCI dropped by 22.1% to 4,905 in 1H20. We looked at various stocks in JCI that have contributed the most to the decline and have seen selling pressure.
Statistics Indonesia (BPS) recorded low inflation in Jun-20. The biggest contributor of inflation came from food, beverage and tobacco basket. On inflation components, chicken contributed the most as it brought 0.14% to total inflation.