Consumer confidence improves ahead of elections
Consumer confidence improved in March to its highest level since December 2007, a Bank Indonesia (BI) survey showed, thanks to campaign spending by political parties ahead of elections, Reuters reported.
Political parties and their legislative candidates typically spend heavily on campaign advertisements, food and t-shirts in election years to woo more than 170 million registered voters.
“The enthusiasm now related to legislative campaigns is likely to continue until the presidential elections which are expected to bolster consumer spending,” BI said.
Bank Indonesia's survey of 4,600 households in 18 cities across Indonesia, released on its web site, showed that the consumer confidence index rose to 98.6 in March from a reading of 96.4 in February, the highest since December 2007 when the index reading was 99.1.
A separate survey conducted by state-controlled Danareksa Research Institute also showed improving sentiment, with its index rising to 87.8 in March from 82.9 in February.
“The improved consumer confidence largely reflects the financial gains enjoyed by consumers living in rural areas, many of whom are enjoying the fruits of the ongoing harvesting season," Danareksa said in its survey.
A reading of below 100 for both surveys still means more consumers are pessimistic than optimistic.
On Monday, BI Governor Boediono said the rupiah will strengthen by year-end as investors return to the country after peaceful elections, Bloomberg reported.
“This is not actually only money as such, but money that belongs to our people, which is being temporarily parked outside during the general election, and it will come back again,” he said.
The central bank has also signed currency swaps with Japan and China, which helped boost the rupiah “in the margins,” Boediono said.
BI is “studying” the International Monetary Fund’s new Flexible Credit Line. However, given the “political considerations,” Indonesia may not use it, Boediono said
The country may also get a boost after G-20 countries agreed on principles for financial market regulation, including expanded controls on hedge funds and derivatives trading, and tax havens, as well as rules on compensation and bonuses.
Political parties and their legislative candidates typically spend heavily on campaign advertisements, food and t-shirts in election years to woo more than 170 million registered voters.
“The enthusiasm now related to legislative campaigns is likely to continue until the presidential elections which are expected to bolster consumer spending,” BI said.
Bank Indonesia's survey of 4,600 households in 18 cities across Indonesia, released on its web site, showed that the consumer confidence index rose to 98.6 in March from a reading of 96.4 in February, the highest since December 2007 when the index reading was 99.1.
A separate survey conducted by state-controlled Danareksa Research Institute also showed improving sentiment, with its index rising to 87.8 in March from 82.9 in February.
“The improved consumer confidence largely reflects the financial gains enjoyed by consumers living in rural areas, many of whom are enjoying the fruits of the ongoing harvesting season," Danareksa said in its survey.
A reading of below 100 for both surveys still means more consumers are pessimistic than optimistic.
On Monday, BI Governor Boediono said the rupiah will strengthen by year-end as investors return to the country after peaceful elections, Bloomberg reported.
“This is not actually only money as such, but money that belongs to our people, which is being temporarily parked outside during the general election, and it will come back again,” he said.
The central bank has also signed currency swaps with Japan and China, which helped boost the rupiah “in the margins,” Boediono said.
BI is “studying” the International Monetary Fund’s new Flexible Credit Line. However, given the “political considerations,” Indonesia may not use it, Boediono said
The country may also get a boost after G-20 countries agreed on principles for financial market regulation, including expanded controls on hedge funds and derivatives trading, and tax havens, as well as rules on compensation and bonuses.