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Harambe:  Bloomberg: Rupiah Is Due a Rebound Though Even Bulls Have Questions  


The Indonesian rupiah is seen outperforming all its Asian peers in the final months of 2020 based on consensus forecasts. Yet, even the bulls are warning that the risk proxy could face significant headwinds.

Economic recovery and the nation’s high-yielding debt could lift the rupiah about 1.3% from current levels by end of December, according to analysts surveyed by Bloomberg. It’s fallen 6.5% since January, the most in the region by far, suggesting some catch-up play could be in store.

But there are some big caveats for investors willing to take the risk, with a new surge in coronavirus cases and question marks over the independence of the central bank. Westpac Banking Corp., Australia & New Zealand Banking Group Ltd. and Malayan Banking Bhd. are among those projecting gains after some short-term fluctuations.

“I expect the rupiah to recover toward the end of the year, but this is contingent on some of the current negative headwinds dissipating,” said Khoon Goh, head of Asia research at ANZ. “If the new Covid-19 cases in Indonesia can be brought down, and the proposals to the central bank law impacting on BI independence are dropped, that will see a turnaround in sentiment toward the rupiah, allowing it to outperform.”

Goh expects the rupiah to touch 14,300 per dollar by year-end, versus 14,845 at the close of trading on Tuesday.

Frances Cheung, head of Asia macro strategy at Westpac in Singapore, sees the currency ending 2020 at 14,400. MayBank is more bullish, with a forecast of 14,200, but predicts the advance won’t start just yet.

“We will likely need the ‘dust to settle’ from the U.S. elections, or see more successful vaccine trials being completed, before markets are more comfortable returning to rupiah risk assets,” said Yanxi Tan, a foreign exchange strategist at Maybank.

The median of fourth-quarter projections compiled by Bloomberg is 14,657.

Technical indicators ranging from 50-, 100- and 200-day moving averages to stochastics and relative strength gauges also point to a rebound.

Meanwhile, Bank Indonesia has intensified its intervention in the currency market to defend against rupiah weakness. On Thursday, it will announce any changes to monetary policy and officials are also expected to address lingering concerns over their independence.

Rate-cut risks

Still, Kunal Kundu at Societe Generale SA sees potential interest-rate cuts weighing on the currency and expects it to stay at the bottom of Asia’s league table for the second half of this year.

Mizuho Bank Ltd. estimates the rupiah may weaken as far as 15,300 by year-end, amid concerns over the virus and debt monetization.

“The resurgence of Covid is hard to contain in Indonesia, which is not doing the rupiah any favors,” said Vishnu Varathan, Mizuho’s head of economics and strategy.


Tishwash:   Iraq budget 2020: its deficit is close to half, and its money for salaries and corona

The Parliamentary Economic and Investment Committee revealed, on Wednesday, the size of the federal budget deficit for the year 2020, indicating that it focuses on securing salaries and financing the ration card, as well as facing the Corona pandemic.

A member of the committee, Ali Al-Lami, told Shafaq News, “The draft general budget for the year 2020 does not contain any investment allocations, and focused only on securing the salaries of employees and retirees, financing the ration card and providing financial allocations to the Ministry of Health to confront the Corona pandemic.”

He added that “the fiscal deficit in the 2020 budget is 45%,” noting that “budget financing depends on oil and non-oil revenues, in addition to the financial loans that the government has directed to within the financial borrowing law for the year 2020.”

The Iraqi Council of Ministers approved, on Monday, the draft federal budget law for 2020, and sent it to the House of Representatives.

A spokesman for the Prime Minister, Ahmed Mulla Talal, said in a tweet to him, which was seen by Shafaq News Agency, that “in order to organize the spending process and secure the necessary expenditures for the remaining three months of the fiscal year, and as a commitment by the government to the decision of the House of Representatives, the Cabinet approved the draft Federal Budget Law 2020, And send it to the House of Representatives. ”  link