Indonesia’s Money Supply (M2) growth edged downto 8.9% y-o-y in December, from +9.2% in November and +10.4% in October. The slowdown was due to moderation in domestic operation, as the central bank’s liabilities to the government rose, arising from the USD3.5bn global bond issuance in December to finance 2016 state budget. This was, however, mitigated by a slight increase in total loan and an increase in net foreign operation.
The increase in total loans was due to higher growth in loans extended for working capital and investment. Separately, deposit growth stabilised in December, as an increase in savings and demand deposits was offset by a decline in time deposits.
Meanwhile, Indonesia rupiah (IDR) is susceptible to uncertain global financial markets and will likely stay weak in the near term. Hence, Analyst expect the IDR to hover around 14,200-14,600 in 2016.
Indonesia’s Money Supply (M2) growth edged down to 8.9% y-o-y in December, from +9.2% in November and +10.4% in October.The slowdown was due to a slower increase in net domestic asset caused by a rise in the central bank’s liabilities to the government, arising from a USD3.5bn global bond issuance in December to finance 2016 state budget. This was mitigated by a slight increase in total loan growth, as more loans were given to private sector amid early recovery in economic activities. Similarly, net foreign operation recorded a faster increase to 6.4% y-o-y, from 2.4% in November, as the government external debt repayment was offset by higher external debt during the month. Nevertheless, narrow money growth fastened to 12.0% y-o-y in November, from +10.0% in November and +10.2% in October due mainly to a highercash demand by households in tandem with year-end holiday celebration.
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