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Tidbits From TNT” Monday Morning 10-11-2021

Harambe: Vietnamese currency (Dong) forecast to strengthen against US dollar in 2021 |


Fitch Solutions have revised its 2021 average forecast for the Vietnamese dong to VND22,900 per US dollar from VND23,000 per US dollar previously and VND22,800 per US dollar from VND23,200 per US dollar in 2022 as the central bank tolerates a stronger dong over the short term.

The financial services provider also forecast the dong to average VND23,000 per US dollar in 2023.

Since July 2021, the Vietnamese dong has strengthened by 1.3 per cent against the US dollar and the unit has averaged VND23,930 per US dollar in the year-to-October.

“We expect the dong to stabilise around its existing stronger level following its appreciation since July 2021 against the greenback. We maintain our view that strong net inflows from trade and foreign direct investments (FDI) will continue to drive dong strength, but more importantly, the central bank appears to be favouring a stronger dong in order to curb imported inflation from high global commodity prices and international logistics costs,” Fitch analysts said in a report released this week.

According to Fitch, the recovery in export earnings in the coming months should support the dong. Although trade will still suffer disruptions over the fourth quarter of this year due to some COVID-19 containment measures in place, measures by the Government to resume operations of factories should still aid some recovery in activity in the final quarter during the peak business season.

“Fundamentally, trade volumes will continue to be supported by the EU-Viet Nam Free Trade Agreement and the UK-Viet Nam Free Trade Agreement. We forecast Viet Nam’s current account surplus to reach 3.5 per cent of GDP in 2021, narrowing against 6.6 per cent in 2020.”

Fitch believed that the dong trading stronger over Q3 2021 can be attributed to two factors. First, the SBV seeking to curb imported inflation arising from high global commodity prices, given the Government’s goal to contain inflation below 4 per cent. Secondly, the SBV’s agreement with the US on its currency practices so as to stave off punitive tariffs.

Fitch expect the dong to stabilise around VND22,750 per US dollar over 2022, which seems to be a level of comfort for the authorities balancing imported inflation and export competitiveness.

Even if the US dollar were to strengthen further under the scenario of an unexpected hawkish shift of the Federal Reserve, Fitch believe that the SBV has more than sufficient foreign reserves at US$99.8 billion as of June 2021, equivalent to about four months of import cover, to curb volatility on the dong.


Tishwash: World Bank: Iraq’s GDP growth by 0.9% annually and the debt rate has improved

The World Bank announced that the gross domestic product in Iraq grew by 0.9% on an annual basis in the first half of 2021, expecting an improvement in the debt-to-GDP ratio.

The bank said in a report seen by Shafak News Agency; “Economic growth in Iraq is gradually recovering after the pandemic-related contraction last year, due in part to the rise in non-oil activity,” expecting that “improving global oil market conditions will enhance growth in the medium term and transform public and external financial balances into surpluses from 2021, and the recent rise in debt will be reflected.”

He added, “Iraq’s GDP grew in the first half of 2021, by 0.9% on an annual basis, and the non-oil economy grew by more than 21% in the first half of 2021 (on an annual basis) due to the strong performance in the service sectors. “This recovery has outpaced the slowdown in the oil sector, with a 10% drop in the first half of 2121, as Iraq adapted to its quota in OPEC+ early in the year,” he said.

He pointed out that “the prospects for the Iraqi economy have improved with the recovery in global oil markets, but the spread of new COVID-19 variables and the challenges of climate change are major headwinds,” expecting the economy to gradually recover against the background of high oil prices and OPEC + production quotas that are scheduled to be gradually canceled In 2022, oil GDP will therefore be the main driver of growth in the medium term.

The bank expected that “Iraq’s non-oil GDP will recover but remain below 3% on average in 2021-2023 due to the impact of the new COVID-19 Delta variable along with water and electricity shortages affecting agriculture and industries. The fiscal balance should remain in surplus over the medium term, leading to a steady improvement in the debt-to-GDP ratio. link

Harambe: Indonesia’s Rupiah Could Become Asia’s Best-Performing Currency in 2021


The Indonesian rupiah could be Asia’s best-performing currency for the rest of the year with elevated commodity prices boosting the nation’s trade surpluses.

The exporter of coal and palm oil is benefiting from a global energy crisis that has roiled many of its peers that are net commodity importers. Indonesia is due to post September trade figures Friday, following a record $4.74 billion surplus in August — its 16th in a row.

The rupiah rose 1.3% in the third quarter, even as Asian rivals weakened with rising Treasury yields. With the nation’s foreign reserves at a record, Bank Indonesia has plenty of ammunition to support the currency if U.S. yields rise further in coming months.

“We continue to lean positively on the IDR and expect it to remain one of the best performers across EM Asia on a total-returns basis in Q4,” said Divya Devesh, head of ASEAN and South-Asia FX research at Standard Chartered Bank in Singapore.

He noted that Indonesia was in a better position than before the 2013 taper tantrum, with a combined current account trade surplus of $13 billion in the last four quarters, compared with a $12 billion deficit eight years ago.

There are threats to the rupiah’s bid to remain at, or near the top, of Asia’s leadership board this quarter after topping it in the three months ended September. The currency’s inability to breach a technical resistance at 14,200 against the dollar last month despite all the bullish momentum could limit more gains.

Continued increases in Treasury yields — which have climbed almost 20 basis points since the end of September — will also weigh on the attractiveness of the rupiah’s carry trade. Foreign funds have sold the nation’s debt for 13 consecutive days through Oct. 5 on a net basis.

However, many of the rupiah’s regional rivals are facing even bigger headwinds.

The baht has been dragged down by Thailand’s slowing economy and a growing current account deficit, while the Philippine central bank has signaled that the peso could weaken more this quarter. The Singapore dollar’s upside, meanwhile, may be limited if the Monetary Authority of Singapore leaves its policy parameters unchanged at its upcoming monetary policy review, as is widely expected.

The Malaysian currency is the one outlier that could knock the rupiah off its perch. A high vaccination rate enabling authorities to roll back curbs and surging oil prices are buoying Malaysia’s growth. Its neighbor’s gains, however, don’t negate the strong case for the rupiah.


Harambe: Jokowi: Indonesia May Become World’s Seventh-Largest Economy by 2030 |


President Joko “Jokowi” Widodo stated that Indonesia has the potential to become the seventh-largest economy in the world by 2030. This is evident from the continuous development in the digital-based economy in the archipelago, including in the banking, insurance, up to financial technology (fintech) sectors.

The current COVID-19 pandemic, he added, would even accelerate the development of digital technology in economic activities further, “if we control it quickly and properly,” said the head of state in the 2021 OJK Virtual Innovation event as quoted from the Presidential Secretariat’s YouTube channel on Monday, October 11.

Jokowi said Indonesia had great potential to become a digital giant after China and India. “And that could lead us to become the world’s seventh-largest economy by 2030.”

Thus, he underlined that the momentum called for swift and correct responses, followed by efforts to build a strong and sustainable digital financial ecosystem.

Jokowi reminded all that a responsible digital ecosystem must have risk mitigation of possible legal and social issues in a bid to prevent losses and improve protection for the community.

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