Indonesian finance minister Basri Sees Rupiah Back to 2009 Levels After QE Taper

Basri Sees Rupiah Back to 2009 Levels After QE Taper

By Bloomberg on 5:10 pm November 8, 2013.


Chatib Basri said the rupiah and bond yields will return to levels seen in 2009 after the Federal Reserve cuts stimulus that has buoyed emerging-market assets. (GA Photo/Defrizal)

Indonesia’s rupiah and bond yields will return to levels seen in 2009 after the Federal Reserve cuts stimulus that has buoyed emerging-market assets, Finance Minister Chatib Basri said. The currency traded at an average of 10,396 per dollar in 2009, compared with 11,408 as of 1:15 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg.The yield on benchmark 10-year government securities averaged 11.15 percent in 2009, and was 7.93 percent today, data compiled by Bloomberg show.

“The normal world is a world without quantitative easing,” Basri said in an interview with Bloomberg TV Indonesia in Jakarta today. “I see that after the QE taper, we will return to that situation.”

The US central bank will start reducing its $85 billion a month of bond purchases in March, according to an Oct. 17-18 survey by Bloomberg. Global funds pulled Rp 19.98 trillion ($1.8 billion) from Indonesian local-currency government debt in June after the Fed signaled in May that it was considering tapering.

That rupiah has weakened 16 percent against the dollar this year, while the 10-year bond yield rose 2.74 percentage points. Consumer prices increased 8.3 percent in October, official data show.

Inflation will ease to 5.5 percent in 2014, according to state budget assumptions.

“Much depends on the inflation outlook and investor confidence, so it won’t be exactly the same as 2009, which was also a post-crisis environment,” said Gundy Cahyadi, an economist at DBS Group Holdings in Singapore.

“What we saw in May was a test run for what will happen when the Fed does taper, and we see from then that the government and Bank Indonesia understand what’s needed and are making the right preparations.”


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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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