Government Bond Highlights

At the government bond (Surat Utang Negara, “SUN”) auction dated June 22th, 2018, the Indonesia government absorbed the fund of IDR11.7 trillion from the total incoming bid of IDR29.30 trillion. The funds absorbed was higher than the indicative target of IDR10 trillion. FR0064, SUN with 10-year tenor, obtained the biggest bid of IDR3.15 trillion. Indonesia Composite Bond Index (ICBI) closed lower by 1.10% to 236.34 last week.

Emerging countries asset suffered impacts of adversaries sparked by the trade war engulfing allies not only the relationship between the U.S. and China. The European slapped revenge tariff of 25% against an array of the U.S. iconic products. It was the opening salvo in a trade war with the Trump administration’s measures on steel and aluminum.

To subdue jitters of volatile markets, Bank Indonesia (BI) bolstered stimulus measures by spending IDR1.25 trillion on purchasing SUN from the secondary market. BI likely performs 3x forex swap auction in a week to maintain sufficient dollar supply.


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