3/09/2025

BIZ & FINANCE WEDNESDAY | SEP 3, 2025 17 Bank Indonesia wants rupiah to trade around 16,300 a dollar

ECB policymaker calls for steady rates as economy holds up FRANKFURT: The European Central Bank (ECB) should keep interest rates steady as the eurozone economy is holding its own in the face of US tariffs and inflation may still come in higher than expected, ECB policymaker Isabel Schnabel told Reuters. The central bank for the 20 countries that share the euro snapped a year-long easing cycle in July and policymakers are now waiting to see the full impact of US duties agreed in July before deciding if borrowing costs need to fall further. Schnabel – the most influential among the ECB’s hawks, as policymakers who favour higher rates are known – said she didn’t see the need for more cuts and the current, 2% policy rate may be “mildly” stimulating an already buoyant economy. “I believe that we may be already mildly accommodative and therefore I do not see a reason for a further rate cut in the current situation,” the German economist said in an interview. The ECB is expected to keep interest rates on hold at its next meeting on Sept 11 but investors see a good chance it will cut rates again by June, money market data shows. Sources also told Reuters discussions about further easing were likely to resume in the autumn. The US Federal Reserve, under pressure from US President Donald Trump, is expected to cut rates this month. But Schnabel said the euro zone’s economy had fared better than expected thanks to “robust growth in domestic demand” and that it was now in for a “significant fiscal impulse” from Germany’s investment on infrastructure and the military. Contrary to many of her colleagues and the ECB’s own projections, Schnabel argued global trade tariffs imposed by Trump’s administration would push up inflation, even without retaliation from the European Union. “I continue to believe that tariffs are on net inflationary,” Schnabel said. “If you have an increase in input prices globally due to tariffs, and these propagate through global production networks, this will increase inflationary pressures everywhere.”

Covid-19 pandemic where BI bought billions of dollars of government bonds and gave the government all or some of the coupon payments it received. During the parliamentary hearing, Warjiyo said BI’s interest rate cuts of 125 basis points in the past year had helped reduce the government’s borrowing costs. He reiterated BI would continue to assess if there was room for further cuts in the future. – Reuters

government bonds in the secondary market and through a debt switch arrangement with fiscal authorities in the year to Sept 1, Warjiyo said yesterday. He told the parliamentary hearing that under the burden sharing arrangement “we share the interest distribution, so therefore we reduce the cost for the programmes”. He did not provide further explanation, but there was a similarly named arrangement during the

The main stock index rebounded 1.17% yesterday, after falling 2.7% over the previous two sessions. On another matter, Warjiyo said the central bank has agreed on a “burden sharing” deal where it will give the government some bond coupon payments it receives to fund state programmes such as afford able housing and village coopera tives. BI has bought nearly 200 trillion rupiah (RM51.6 billion) of

JAKARTA: Indonesia’s central bank has been guiding the rupiah to a stronger level and will try to get it to trade around 16,300 a dollar, its governor said yesterday, after the currency fell amid unrest across the country. “The rupiah, which yesterday morning (Monday) had reached 16,560 (per dollar) ... today we have stabilised to 16,400,” Perry Warjiyo told a meeting with parliament’s regional council. “We will work to get it lower to 16,300 or even stronger,” he said, reiterating Bank Indonesia’s (BI) commitment to intervene in the offshore and domestic foreign exchange markets. The rupiah fell 0.9% on Friday, as protests intensified in many cities in the Southeast Asian country after a police vehicle hit and killed a motorcycle taxi driver the previous night. Protests have continued this week. The rupiah hit its weakest since Aug 1 of 16,500 a dollar during intraday trade on Monday, but has since firmed, according to LSEG data. o Governor reiterates commitment to intervene in markets to keep currency stab le While Japan’s trade deal with the US helps alleviate uncertainty over the economy, the exact impact of US tariffs remained unknown at this time, he said. “At the moment, the risk of a larger than-expected impact may deserve greater attention,” Himino said in a speech to business leaders in Kushiro, northern Japan. “Overall, the global economy still faces high levels of uncertainty.” Himino also said there were both upside and downside risks to the inflation outlook. While Japan’s tight Palm oil imports rose 16% in August to 993,000 metric tons, the highest point since July 2024, according to estimates from dealers. Soyoil imports in August slumped 28% month-on-month to 355,000 tons, the lowest level in six months, while sunflower oil imports jumped 27% to a seven-month high of 255,000 tons, according to dealer estimates. In August, India imported 6,000 tons of canola oil for the first time in

The rupiah hit its weakest since Aug 1 during intraday trading on Monday but has since firmed. – AFPPIC

BOJ must keep increasing rates, says deputy governor KUSHIRO: Bank of Japan (BOJ) deputy governor Ryozo Himino said yesterday the central bank should keep raising interest rates but warned that global economic uncertainty remains high, suggesting it was in no rush to push up still-low borrowing costs. materialise much, that would work in favour of raising interest rates,” Himino told a news conference. But it was hard to predict exactly when the BOJ would know how significant the tariff impact was, he added. uncertainty over the impact of U.S. tariffs on Japan’s economy. But stubbornly high food inflation and prospects of sustained wage growth have led some BOJ board members to warn of second-round price effects that could warrant another rate hike.

labour market may push up wages, slowing global growth and the hit to Japan’s economy from higher US levies could weigh on prices, he said. “After temporarily stalling due to slowing growth from the impact of tariffs, we expect Japan’s underlying inflation to eventually stabilise around levels consistent with our 2% target,” Himino said. “If our baseline scenario is realised, it would be appropriate to continue raising interest rates in accordance with improvements in the economy and prices,” he said. Himino offered few hints on how soon the central bank could raise interest rates, saying only that it needs to ensure rate increases are neither premature nor too late. “If it becomes clear the impact of US tariffs (on Japan’s economy) won’t nearly five years, they said. Higher imports of palm oil and soyoil lifted India’s total edible oil imports in August by 3.6% to 1.6 million tons from a month earlier, the highest level in 13 months, according to dealers’ estimates. The import figures exclude duty free shipments that arrived via land borders from Nepal, they said. Refiners increased palm oil purchases over the past two months

The yen weakened and Japan’s Nikkei stock average briefly extended gains after Himino’s remarks, as some market players saw them as less hawkish than expected. The BOJ exited a massive, decade long stimulus last year and raised short-term rates to 0.5% in January on the view Japan was on the cusp of sustainably achieving its 2% inflation target. While consumer inflation has exceeded the BOJ’s target for well over three years, governor Kazuo Ueda has vowed to go slow in hiking rates on ahead of the festival season, as the tropical oil remained far cheaper than soyoil, said Rajesh Patel, managing partner at GGN Research, an edible oil trader. Demand for edible oil, particularly palm oil, in India typically rises during the festival season due to increased consumption of sweets and fried foods. India’s palm oil imports are likely to remain above 900,000 tons in

Nearly two-thirds of economists polled by Reuters in August expect the BOJ to raise rates again later this year. Formerly head of Japan’s bank regulator, Himino has been critical of the BOJ’s ultra-loose monetary policy and seen by markets as among those on the board more eager to hike rates. Himino said the BOJ should reduce its presence in the Japanese government bond market as keeping excessive money in place unnecessarily could carry risks. – Reuters September, with soyoil imports expected to exceed 450,000 tons, said a Mumbai-based dealer with a global trade house. India buys palm oil mainly from Indonesia and Malaysia, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine. Nepal’s edible oil imports were 95,000 tons in August, up from 86,000 tons in July, GGN Research estimated. – Reuters

She also said tariffs would disrupt supply chains, citing Chinese re strictions on the export of several rare earths and a U.S. decision to tax even small-value parcels as examples. – Reuters India’s August palm oil imports surge 16% to 13-month high

MUMBAI: India’s palm oil imports surged in August to a 13-month high, as competitive pricing relative to soyoil prompted refiners to ramp up purchases ahead of the festive season, according to five dealers. Higher palm oil imports by India, the world’s largest buyer of vegetable oils, are expected to help top producers Indonesia and Malaysia reduce inventories and support benchmark Malaysian palm oil futures.