Rupiah Tests Psychological Levels of IDR 14,000/USD, making FR0082 yield closer to 6% level. The benchmark series of Government Securities (SUN) closed mixed yesterday, in line with the waiting for the results of the Board of Governors’ Meeting (RDG) of Bank Indonesia (BI) this afternoon. Most markets expect the BI Seven Days Reverse Repo Rate (7-DRRR) for November to remain at 4%. On the other hand, the market is paying more attention to the economic outlook for the remainder of 2020 and 2021. In addition, the bond movement yesterday was due to market players still responding positively to the good news from Moderna’s vaccine, which was successful in its final clinical trial. Earlier this week, Moderna released the results of the third phase of the trial which showed that the vaccine it made had an efficacy level or the percentage of volunteers who received the vaccine successfully formed antibodies up to 94.5%.

Indonesia Eximbank’s NPL Challenge. The Indonesian Export Financing Agency (LPEI) or Indonesia Eximbank projects this year’s non-performing loan (NPL) of 23.3% or IDR 21.70 trillion. This amount is down from the NPL until the end of October 2020 which amounted to IDR 22.72 trillion. The company targets the NPL ratio to continue to be reduced to reach 7.3% in 2024. NPL is the focus of LPEI for future plans, with the projected that in 2020 it will decrease by IDR 1.1 trillion to IDR 21.7 trillion. And in the following year it decreases by IDR 3 trillion so that in 2024 LPEI expects a net NPL of 5% or 4.4%. This improvement in NPL will be followed by an increase in the company’s reserve ratio, which at the end of this year is estimated to only reach 49%. Meanwhile, in the next 4 years, it is expected that the coverage ratio will be more than 200%. (CNBC Indonesia)

The Government Has Not Announced Excise Tariff Hikes. Until mid-November, the government has not yet determined an increase in cigarette excise rates in 2021. Usually, the rules regarding the increase in excise tax on tobacco (CHT) as outlined in the Minister of Finance Regulation (PMK) are issued in early October. Finance Minister Sri Mulyani said that the government would determine the most ideal amount of excise tax increase, formulating cigarette excise policy by considering five dimensions. The five dimensions are public health, cigarette industry workers, tobacco industry farmers and suppliers, illegal cigarette circulation, and state revenue. (Investor Daily)

Investors Await BI 7-DRRR Data This Afternoon. Market players are watching BI’s decision on the direction of interest rates which will determine the movement of the bond market today. BI’s decision will also affect domestic capital inflow. Based on a Bloomberg survey, the BI 7-DRRR benchmark interest rate for November is projected to remain at 4% level. This is a positive sentiment for the rupiah, which is currently testing the psychological level of IDR 14,000 / USD. Based on the spot market, the rupiah weakened 0.11% to IDR 14,070 / USD yesterday. Meanwhile, BI’s middle rate, the rupiah weakened 0.32% to IDR 14,118 / USD.

-REVIEW (Nov. 18, 2020)-
FR0081 (5yr): +0.4 Bps to 105.43 (5.14%)
FR0082 (10yr): +0.2 Bps to 106.31 (6.13%)
FR0080 (15yr): -2.2 Bps to 107.77 (6.65%)
FR0083 (20yr): -2.4 Bps to 104.49 (7.07%)

FR0086 (6yr): -0.1 Bps to 101.43 (5.19%)
FR0087 (11yr): -0.4 Bps to 102.50 (6.16%)

UST 2yr: +0.170 point to 0.17%
UST 5yr: +0.016 point to 0.39%
UST 10yr: +0.012 point to 0.87%
UST 30yr: -0.006 point to 1.60%
German Bund 10yr: +0.008 point to -0.55%
UK Gilt 10yr: +0.012 point to 0.33%

CDS 2yr: +3.47% to 28.63
CDS 5yr: +0.26% to 75.92
CDS 10yr: -0.36% to 138.85

WTI: +0.94% to USD41.82/Barrel
BRENT: +1.34% to USD44.34/Barrel
Source: Bloomberg