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DBS Indonesia, The Renowned Bank, Has Been Recognized As The Best Market Maker By FX LSEG

The Group Financial Market (GFM) business unit of PT Bank DBS Indonesia has been awarded the 2nd runner up in the Best Market Maker category at the FX LSEG Award Indonesia 2024, based on foreign exchange (forex) market activities on the electronic trading platform throughout 2023. This award is a recognition of Bank DBS Indonesia's active contribution in creating a more efficient price formation process in the Indonesian forex market.

The award was presented by Head of Sales APAC Workflow Solutions, London Stock Exchange Group Paul Charmatz, Head of Capital Market FX Sales, London Stock Exchange Group Tan Soo Cin, and Head of Financial Market Development Department, Bank Indonesia Donny Hutabarat, who delivered the keynote speech, and represented by Managing Director & Head of Global Financial Markets PT Bank DBS Indonesia Puneet Punj.

Compared to the initial 2024 outlook that predicted a mild economic slowdown and an expected decrease in inflation to 2 percent, we are now seeing stubborn inflation in the US with the Core Consumer Price Index (CPI) ranging from 3.5-4 percent (YTD). The labor market is also considered strong, with an average of 230,000 new jobs added per month. Additionally, US household wealth has increased due to gains in the equity, crypto, and real estate markets.

Market expectations have shifted from six anticipated interest rate cuts in early 2024 to less than twice for this year, leading to a narrowing of yield differentials between emerging market bonds and US Treasuries. Emerging market flows and currency movements have been volatile, affecting capital flows and ultimately the balance of payments in most emerging markets.

The year-to-date trend of the Indonesian Rupiah (IDR) has been in line with most Asian currencies. Furthermore, foreign direct investment (FDI) inflows into Indonesia have been stable over the past few years.

The most volatile component is the portfolio flow, but with the launch of the Indonesian Rupiah Securities (SRBI) by Bank Indonesia, there is a stable inflow from abroad into this instrument and Bank DBS Indonesia hopes that SRBI can reduce sharp changes in portfolio flows in 2024.

By the end of 2024, Bank DBS Indonesia estimates Bank Indonesia's interest rate (BI) at 6.25 percent, the Federal Funds Rate at 5 percent, the USD/IDR exchange rate at 15,800, and the 10-year Indonesian government bond yield at 7 percent.

These prospects indicate a challenging yet resilient economic environment. Despite high inflation, a strong labor market, and increasing household wealth show underlying economic strength. Market expectations shifting towards a rate cut show a cautious approach to monetary policy, with an emphasis on stability.

For Indonesia, low inflation, attractive real yields, a relatively stable currency, sufficient foreign exchange reserves, and strong economic growth projections provide a positive outlook. However, Indonesia must remain vigilant against further strengthening of the DXY and commodity price declines.

Overall, the future shows optimism that must be accompanied by caution, with growth opportunities in stable economic policies and sustainable investments in key sectors. These insights provide critical understanding of economic prospects, policy expectations, and market dynamics affecting the global and Indonesian economy.

Managing Director & Head of Global Financial Markets PT Bank DBS Indonesia Puneet Punj said, "The recognition of PT Bank DBS Indonesia as the 2nd runner up for the Best Market Maker category at the FX LSEG Award Indonesia 2024 highlights our commitment to being at the forefront of the FX market."