The 11,730 USD-rupiah resistance level didn’t hold for long.
Today the US dollar-rupiah closed to a fresh 5 year high at 11,765 after hitting 11,798 intraday.
The yield of the Indonesia’s sovereign 10 year bonds was marginally up (one basis point) though.
But activities in the domestic bond market barely explained of the weakness of the rupiah.
Early today, Indonesia’s government reportedly failed to raise a targeted $450 million in dollar bond sales. The government settled with only $190 million. This comes even when coupon yields had been priced higher or “at a weighted average yield of 3.51671%, about half a percentage point higher than a bond with a similar maturity that Indonesia had earlier sold overseas” according to the Wall Street Journal.
This meant that the markets expected much higher yields than what the Indonesian government had been willing to offer. So the failed expectations by Indonesia's bond market may have been vented on the rupiah (via outflows).
Meanwhile the weak rupiah seems to have been transmitted to Indonesia’s stocks where the benchmark JCI got bludgeoned by 2.3%. And as shown above, the gist of the losses by the JCI occurred at the session’s close.
ASEAN stocks has been largely mixed today amidst the rupiah's weakness.
The Phisix ended its 6 day losing streak with a last minute rally.
After spending most of the day on the red, the Phisix closed .35% higher. Curiously, opposite to the JCI, gains in the Phisix had been due to a last minute spike (technistock.net)
Given the lopsided advance (51) decline (111) spread (-60) and the mixed sectoral performance (PSE), today’s rebound appears to have been ‘centered’ on a few heavyweights. This may have been due to entities desperate to see a higher Phisix.
Incidentally the Philippine bellwether closed 1.32% Monday a day after Manny Pacquiao’s victory.
A win by the legendary Pacquiao supposedly would have lifted the market’s sentiments. Yet despite the statistical data used to “prove” such postulations where Pacquiao’s triumph should have meant higher stocks since stocks rose by 73% of the time (frequency) backed by .5% gains (scale), apparently Pacquiao’s win became a black swan or an outlier event.
This validates my view of the tendency by so-called experts to use the current events--via the availability heuristic, resorting to pattern seeking methods and appealing to emotions--to justify personal biases and to satisfy public demand for simplistic explanations.
Yet such events turn about to be largely irrelevant or diversionary noises.
1 comment:
You relate, Meanwhile the weak rupiah seems to have been transmitted to Indonesia’s stocks where the benchmark JCI got bludgeoned by 2.3%.
Well yes, that transmission is understandable.
For example, in the overall global stock market, Money died October 23, 2013, with Credit, AGG, and Major Currencies, DBV, and Emerging Market Currencies, CEW, falling lower in value.
And just now, that is on November 25, 2013, that death is getting transmitted to stocks, VT, which fell a tiny amount, that being 0.4%.
Please consider the following concept as a foundation upon which future analysis can be built. Fiat money is defined as Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW. If that is true then one can understand that concept, that the death of fiat money, which occurred on October 23, 2013, when the bond vigilantes called the Interest Rate on the Ten Year Note, ^TNX, higher from 2.48%, was decisively transmitted to fiat wealth, which is defined as Stocks, VT, on November 25, 2013, which traded 0.1% lower.
Chinese Financials, CHIX, led China, YAO, lower, terminating the economic stimulus coming from PBoC Governor Zhou’s liberalization of domestic interest rates and reduction of intervention in the foreign exchange market.
Japan’s Bank, SMFG, led the Nikkei, NKY, lower on fears of the failure of Abenomics; the Yen, FXY, traded lower closing at 96.27.
Of great significant note, the EUR/JPY closed lower at 137.40, down from 137.43 on Friday November 22, 2013. The Eurozone, EZU, traded lower on fears of uncontrollable deflation; the Euro, FXE, traded lower closing at 133.70
Perhaps one might enjoy Shaun Richards who asks pessimistically in Mindful Money What Options Are Left For The European Central Bank? http://tinyurl.com/mhhdkyq
And perhaps one might enjoy John Mauldin communicates concepts of EU CPI deflation, monetary deflation, and economic recession in Thoughts From The Frontline PDF report Game of Thrones - European style http://d21uq3hx4esec9.cloudfront.net/uploads/pdf/131124_TFTF2.pdf
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