As was widely expected the Bank of Indonesia held its key 7day repo rate at 4.75%. Yet the overall effect and tone was slightly dovish. The decision was based on the central banks effort to keep a balanced approach between supporting recovering economic growth and maintaining financial vigilance. On the growth front BI indicated that the economic recovery would decelerated but continue at a decent pace on the back of solid export expansion.
BI forecast anticipated GDP growth at 5.0% to 5.4% in 2017. Despite the stable growth and holiday season inflation remained subdued well within the 4% 2017 target area. In regards to the IDR, the banks was not concerned over recent appreciation as the price movement was due to stable capital inflows. We anticipate policy strategy will remain unchanged with a bias towards easing to support slowing growth for the remainder of 2017. BI decision to not begin slashing rates and overall risk supportive environment should further support our view to be lon
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