Indonesia: Further decline in FDI – UOB

Pablo Piovano FXStreet

Economist at UOB Group Enrico Tanuwidjaja and Haris Handy reviewed the FDI figures in Indonesia during the April-June period.

Key Quotes

“Indonesia’s direct investment contracted in 2Q20, as the COVID-19 pandemic batters both the national and global economy. The data from Investment Coordinating Board Indonesia (BKPM) showed foreign direct investment (FDI) fell by 6.9% y/y to IDR 97.6tr (equivalent to USD 6.8bn, using 2020 national budget IDR exchange rate assumption of IDR 14,400 per USD) in the AprilJune period, continuing the downward trend recorded at -9.2% in the first three months in 2020.”

“As the COVID-19 cases continue to rise, Investment Coordinating Board Indonesia (BKPM) reiterated that the board has changed its target for both domestic and foreign investment from IDR 886tr to IDR 817tr in 2020. Despite the Covid-19 Impact, BKPM remains optimistic that FDI would improve in 2H20.”

“Singapore remained the largest foreign investor in Indonesia, with investment valued at USD 2.0bn for 3,860 projects, followed by Hong Kong at USD 1.2bn for 725 projects, and China at USD 1.1bn for 722 projects. By sector, transportation, warehouse, and telecommunication sector were the largest recipients of DDI in 2Q20, valued at IDR 17.7tr.”

“Going forward, we are cautiously optimistic that Indonesia will be able to attract much-needed longer-term investment in the country, after the pandemic is over, given the resilient of the domestic economy. Nevertheless, continuous reforms and policy actions, as well as better ground implementation needs to be ensured to achieve lower perception of risk, higher and stickier investment in the future.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

Japanese Yen gains ground as traders await Fed rate decision

The USD/JPY pair loses ground to near 160.25 during the early European trading hours. Traders prefer to wait on the sidelines ahead of the US Federal Reserve interest rate decision under new Chair Kevin Warsh later on Wednesday.

AUD/USD stays pressured; holds above 0.7050 as traders await Fed decision

The AUD/USD pair struggles to capitalize on the previous day's hawkish Reserve Bank of Australia-inspired bounce and trades with a negative bias for the second consecutive day on Wednesday. Spot prices, however, hold above the 0.7050 level as traders opt to wait for the outcome of a two-day FOMC policy meeting before placing fresh directional bets.

Gold extends intraday slide towards $4,250

Gold turned negative by the end of Wednesday and trades in the $4,260 price zone. The US Federal Reserve left rates unchanged, but delivered a hawkish message, even though Chair Kevin Warsh refused to provide forward guidance.

Two altcoins to watch as DeFi market cap nears $70B

Decentralized Finance (DeFi) tokens exhibit mixed signals on Wednesday, with Uniswap (UNI) slightly pulling back from an early-week rally to highs around $3.73, while Aster (ASTER) extends its recovery near $0.80. Bitcoin (BTC) holds above $65,000 following a rejection at June highs around $67,000.

Federal Reserve set to hold interest rates in Warsh's debut as chair

The United States Federal Reserve announces its interest rate decision on Wednesday, another pivotal meeting for markets to gauge the stance of policymakers and new Chair Kevin Warsh as energy prices retreat after the United States and Iran reached a framework deal to reopen the Strait of Hormuz.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.