Jakarta: Uncertainty in the global market remains high in line with developments in the global economy towards the third quarter of 2019.
The economic slowdown, especially in some developed countries, India, and China, can affect global manufacturing activities, cause financial market turmoil globally and drive a shift to safe haven assets such as gold.
"As a result, the rupiah weakened by about two percent against the dollar last month to Rp14,300 per USD at least until mid-August 2019," explained University of Indonesia economist Febrio Kacaribu in his macroeconomic analysis series, Wednesday, September 18 2019.
According to him, the big risk prompted an increase in capital outflows at the beginning of last month, triggering an increase in the yield on 10-year and one-year government bonds to 7.6 percent and 6.3 percent respectively in August.
Meanwhile, despite a slight surge in yields last month, the easing of tension in the recent trade war has triggered a decline in the yield of 10-year and one-year government bonds to 7.35 percent and 6.16 percent.
"We see that there is still a tendency for a decline in bond yields to reach seven percent at the end of the year," he added.
As for the domestic side, Bank Indonesia (BI) is becoming more concerned with the risks of economic growth and shifting its policy direction to policies that support growth. BI unexpectedly cut interest rates by 25 basis points to 5.5 percent last month.