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Coronavirus pandemic | Now you may be allowed to defer date of journey beyond April 30 in your travel insurance

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Amidst the coronavirus (COVID-19) pandemic, the insurance regulator has asked companies to provide an option to defer date of journey in travel insurance products.

This will be for policies that were/are valid between March 22 and April 30.

Due to COVID-19 and the ensuing lockdown in India and across the globe, several travellers have been either stranded in another location domestically or abroad.

Travel restrictions will be applicable till April 14 for the time being. There was a fear among individuals with travel insurance products about the validity of the product due to cancellation of flights.

Policy holders can call up their insurers to check if this facility has been provided.

The total number of reported COVID-19 cases in India stands at 1,251. The Union Health Ministry has said that 102 patients have recovered so far, but 32 have died.

This decision by Insurance Regulatory and Development and Authority of India (IRDAI) was among a slew of other measures announced to help tide over the COVID-19 situation.

In the first week of March, IRDAI had asked insurance companies to expeditiously settle all COVID-19 claims and also handle quarantine-related claims on the basis of the terms and conditions of the health insurance policy.

Later, on March 23, IRDAI had also asked life insurers to give an additional grace period of 30 days for payment of renewal premiums.

Insurers were also asked to design products specifically for covering COVID-19 that would cover the costs of the treatment. Typically, if an individual is admitted to a state-run hospital the government bears the treatment costs. However, in the case of private hospitals and home quarantine-related charges, the costs are to be borne by the affected persons.

As far as policyholders are concerned, IRDAI said that insurers have to display on their website a dedicated help line number for policyholders and another help line number for other stakeholders including agents and intermediaries.

Though the normal response time for policyholder complaint redressal is 15 days, due to the prevailing lockdown situation, an additional 21 days will be allowed. This is for all complaints which are received on or after March 15, 2020 and up to April 30, 2020. However, this additional response time is not applicable to complaints pertaining to COVID-19 for which the extant timelines will continue to apply.

For insurers

IRDAI has said that while insurance has been exempted from the lockdown, companies should advise their offices to function with only absolutely necessary staff including those involved in claims settlement, authorisation for hospitalisation, renewal of insurance policies and such other activities.

“To the extent possible, work from home may be adopted by facilitating the same for the staff of insurers, intermediaries and agents,” said IRDAI.

Further, the regulator said companies have to put in place a Business Continuity Plan (BCP) which inter alia deals with processes, transactions, reporting and customer services to be handled in a seamless manner to take care of the present situation.

Insurers also have to set up a crisis management committee to evaluate all risks including strategic, operational, insurance, liquidity, credit, reputational, market, foreign exchange, reduction in new business, reduction in renewal business, asset liability mismatch, reduction in yield, capital erosion, and claims in the wake of present situation, and shall devise necessary mitigation measures.

Any severe impact on the operations or capital requirements or solvency margin has to be promptly communicated to IRDAI.

Since remote working will have to be facilitated, IRDAI said that it is possible that there could be an increase in the number of cyber-attacks on personal computer networks. Therefore, insurers need to take precautionary measures to address such cyber risks and mitigate them as soon as they are identified.

For new policy sales, IRDAI said that wherever email addresses of policyholders are available, policy documents will have to be issued through email.

The US weighs the grim math of death vs the economy

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Hollstadt Consulting CEO Molly Jungbauer has had to let go 30 of the 150 employees at her St. Paul, Minnesota firm to weather the drop in revenue from travel industry clients because of the coronavirus.

She's worried about her daughter, who lives in New York and has the disease. But she also worries that shutting the economy with open-ended stay-at-home orders could have an "irreversible" impact.

So she was relieved to hear Minnesota Governor Tim Walz's plan last week: clamp down on commerce and social activity now but then reopen the state for business by May 4. "It is nice to know that we have somewhat of an end date," she said.

Coronavirus shut-downs could lop 25 percent or more from US output, some economists forecast, throwing tens of millions of Americans out of work.  The US government and the Fed are mounting what could be a $6 trillion economic rescue.

And elected US politicians entrusted with public welfare are making calculations centered around the question: How many possibly preventable deaths are acceptable, as weighed against millions of jobs lost and trillions of dollars of economic output foregone?

Declaring the cure can't be worse than the disease, President Donald Trump has said that by April 12, he wanted churches all over the country to be "packed" with Easter celebrants. On Sunday, Trump backed away from that goal by extending social distancing guidelines to April 30.

More testing is critical, Trump advisor Stephen Moore told Reuters.

"Once you have testing you can open up the economy," he said. South Korea has tested a much bigger portion of its citizens than the United States has, allowing it to reduce infections and without stopping its economy. The US has ramped up its capacity in recent weeks, though some states are making bigger inroads than others.

Also key, Moore said, is understanding if new cases are rising as fast in the Midwest as on the coasts, and if more people can, like the hundreds of thousands of workers at FedEx still on the job, practice social distancing and still work.

"You kind of have to look at the businesses that are running," Moore said.

US state and local officials are doing their own calculus.

"We will not put a dollar figure on human lives," New York Governor Andrew Cuomo said. Almost half of the 130,000 US cases to date have appeared in New York, where some hospitals are overwhelmed with critically-ill patients.

Other governors in states with fewer cases are forging ahead with plans to try to limit both deaths and economic damage.

On Wednesday, Walz - who is self-quarantining after possible exposure - told Minnesotans that models project an eventual 2.4 million infections statewide.

If allowed to spread unchecked now, he said, as many as 74,000 Minnesotans could die because too few hospital beds and ventilators means patients won't get the medical care they need.

Economically, he said, the state can't afford to stay shut for a year or more until a vaccine is developed, an approach an influential Imperial College study recommends.

So Walz is imposing a strict "stay-at-home" order for two weeks and a more relaxed version for a few weeks after that, to give hospitals the time to prepare. Epidemiologists refer to this as "flattening the curve."

"I don't believe it's prudent to try to shelter in place until a vaccine is there," Walz said. "I'm asking you to buckle it up for a few more weeks here."

Even that will be painful: state officials estimate 28 percent of Minnesotans will be temporarily jobless for the next two weeks, with about 40 percent of those without any form of paid leave.

Once businesses and schools reopen, Walz hopes to use testing and targeted quarantines to keep new cases in check.

But he acknowledged there will be more deaths. "It's agonizing and I find it nearly unacceptable," he said. "My job is to reduce it down."

Coronavirus is about ten times deadlier than the flu, killing one of every hundred that get it, according to Anthony Fauci, the top US infectious disease expert. Given Walz's estimate of 2.4 million Minnesota residents infected, that means 24,000 dead.

So far there have been 503 cases and nine deaths in the state.


For a growing chorus of economists, the notion of weighing deaths against the economy is fundamentally flawed.

"One can do those types of quite gruesome calculations" said MIT economist Emil Verner. But evidence suggests "that in some sense, that's a false tradeoff," he said.

Verner last week co-authored a paper about the response to the 1918 flu epidemic and found that cities that restricted public gatherings sooner and longer had fewer deaths - and ultimately emerged from the pandemic with stronger economic growth.

"Saving lives and saving the economy are not in conflict right now," former Fed Chair Janet Yellen and more than 30 other current and former policymakers and economists wrote in a joint statement published earlier this week.

Paul Winfree, director of economic policy studies at the conservative Heritage Foundation, agrees that easing restrictions too early could be damaging. But, he said, allowing the downturn to deepen into a depression would ultimately negatively impact health.

"The White House is starting to weigh the long and short term health consequences of coronavirus and mitigation...(and) they are hearing from the business community that there needs to be some level of certainty," he said.

The question remains if the American consumer, who is responsible for about two-thirds of US GDP, will be confident enough to go to crowded malls and cozy restaurants if the death toll is still rising.

UCLA professor Andy Atkeson says that though lifting lockdowns may seem like an economic shot in the arm, doing so could let infections shoot right back up again.

Americans would lock themselves down, afraid to go out to shop and work given the illness and death around them," Atkeson wrote.

From rate cuts to liquidity measures, RBI goes all guns blazing: 8 key takeaways from RBI policy

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The Reserve Bank of India (RBI) announced a huge 75 basis points rate cut on March 27, bringing it to 4.40 percent from 5.15 percent.

Announcing a series of measures to ensure liquidity and stability in the country’s financial system as India battles coronavirus, the Reserve Bank of India (RBI) governor Shaktikanta Das said the monetary policy committee (MPC) met almost a week ahead of the scheduled date.

“This decision of the rate cut and the advancement of MPC have been warranted by the disruptive force of COVID-19. It is intended to mitigate the negative effects of the virus, to revive growth and to preserve financial stability,” Das said.

The RBI slashed repo rate by 75 bps to 4.40 percent while the reverse repo rate, which sets the floor of the liquidity adjustment facility (LAF), was reduced by 90 bps to 4 percent.

“The purpose of this measure, relating to reverse repo is to make it relatively unattractive for the banks to passively deposit the funds with the RBI and instead to use these funds to lending to the productive sectors of the economy,” Das said.

Growth outlook uncertain

The RBI said that the coronavirus pandemic will affect the growth of most sectors.

“Apart from continuing resilience from agriculture and allied sectors, most sectors of the economy will be adversely impacted by COVID-19, depending upon its intensity, spread and duration,” Das said, referring to the illness caused by the virus.

“Projections of growth and inflation would be heavily contingent on the intensity, spread and duration of COVID-19. The MPC has refrained from giving out specific growth and inflation numbers because the situation is changing and the outlook is uncertain.”

There is a rising probability that a large part of the global economy will slip into recession. Turning to growth in India, the 5 percent growth expectation is at risk, the RBI governor said.

Liquidity measures

“Large selloffs in markets have intensified redemption pressure. The RBI will conduct auctions of long-term repo operation (LTRO) of up to three-year tenure of appropriate sizes for a total amount up to Rs 1 lakh crore at a floating rate linked to the policy repo rate,” Das said.

The RBI governor emphasised that the liquidity availed by banks under the scheme has to be deployed in investment-grade corporate bonds, commercial papers and non-convertible debentures, over and above, the outstanding level of those investments in these bonds, as on March 25, 2020.

Eligible instruments comprise both primary market issuances as well as secondary market purchases, including from MFs and NBFCs.

“Investments made by the banks under this facility will be classified as held-to-maturity (HTM) even in excess of 25 percent of the total investment permitted to be included in HTM portfolio,” Das said.

Exposure under this facility will also be not recognised under the large-exposure framework.

The first auction of Rs 25,000 crore, under this arrangement, will be conducted later on March 27.

CRR reduced by 100 bps

The RBI said that despite ample liquidity in the system, its distribution was highly asymmetrical.

“To help banks tide over the disruption caused by COVID-19, it has been decided to reduce the cash-reserve-ratio (CRR) of all banks by 100 bps to 3 percent of net demand and time liabilities (NDTL) with effect from March 28 for a period of one year,” Das said.

This reduction would release primary liquidity of about Rs 1.37 lakh crore uniformly across the banking system in proportion to liabilities of the constituents rather than in relation to their holding of excess SLR.

The RBI also reduced the minimum daily CRR balance from 90 percent to 80 percent, effective March 28. This is a one-time dispensation available up to June 26, 2020.

The RBI increased the accommodation under the marginal standing facility (MSF) from 2 percent of the statutory liquidity ratio (SLR) to 3 percent with immediate effect. This measure will be applicable up to June 30, 2020 and it should provide comfort to the banking system by allowing it to avail an additional Rs 1.37 lakh crore of liquidity under the LAF window.

These measures will inject a liquidity of 3.74 lakh crore in the system.

Widening monetary policy rate corridor

The  RBI also decided to widen the monetary policy rate corridor.

"In view of persistent excess liquidity, it has been decided to widen the existing policy rate corridor from 50 bps to 65 bps. Under the new corridor, the reverse repo rate under the LAF would be 40 bps lower than the policy repo rate against the existing 25 bps. The marginal standing facility rate would continue to be 25 bps above the policy rates,” Das said.

Moratorium on term loans

All lending institutions have been permitted a three-month moratorium on payments of instalments of all term loans outstanding as of March 1, 2020.

Deferment of interest on working capital facilities

Lending institutions can defer by three months payment of interest outstanding as on March 1 on working capital facilities sanctioned in the form of cash-credit and overdraft and such. The accumulated interest for the period will be paid at the end of the deferment period.

The moratorium on term loans and the deferment of interest on working capital will not result in asset classification downgrade, the RBI governor said.

Easing of working capital financing

In respect of working capital facilities sanctioned in the form of cash credit, overdraft, lending institutions are allowed to recalculate drawing power by reducing margins or by reassessing the working capital cycle for borrowers.

More to come?

The RBI governor said the central bank was closely monitoring the situation and will step in whenever required.

“Let me assure you that the RBI is at work in mission mode. We have been monitoring the evolving financial market and the macroeconomic conditions and calibrating its operations to meet any need for additional liquidity support as well as to take other measures if warranted,” said the RBI governor.

First step in right direction: Rahul Gandhi on Centre's financial package

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Congress leader Rahul Gandhi welcomed the financial package announced by the Centre on Thursday, saying it was the first step in the right direction.

The comments come after the government unveiled a Rs 1.70-lakh-crore economic package involving free food grain and cooking gas to the poor for the next three months, one-time doles to women and poor senior citizens, higher wages to workers and measures to boost liquidity of employees, as it looked to contain the impact of unprecedented nationwide lockdown due to the novel coronavirus pandemic.

"The Govt announcement today of a financial assistance package, is the first step in the right direction," Gandhi tweeted.

"India owes a debt to its farmers, daily wage earners, labourers, women & the elderly who are bearing the brunt of the ongoing lockdown."

Coronavirus impact | Moody’s Analytics cautions about millions of job losses in coming weeks

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Things will get worse, indicates the latest report by Moody’s Analytics on the economic shock of the global coronavirus (COVID-19) pandemic.

“Millions of job losses are likely in the coming weeks, particularly for households that live paycheque to paycheque,” Moody's Analytics' Chief Economist Mark Zandi said.

“COVID-19 has created a worldwide economic tsunami. The global economy is engulfed in a serious downturn. The virus has caused significant parts of the Asian and now European and US economies to all but shut down. More financial pain is quickly coming as layoffs mount, businesses curtail investment, and retirement nest eggs evaporate,” he added.

In January Moody’s Analytics expected global real gross domestic product (GDP) growth of 2.6 percent in 2020, which they now expect to fall by 0.4 percent. For China, in particular, GDP decline is expected by 27 percent at an annualised rate in Q1.

On the jobs front, businesses in the United States have laid-off workers and initial claims for unemployment insurance spiked to 280,000 in the second week of March compared to 210,000 in the week prior. US claims of 240,000 per week are consistent with no job growth, it noted.

“Central banks have responded aggressively but are running out of room to maneuver as interest rates hit the zero lower bound. The onus is now on governments to quickly provide substantial financial support to hard-pressed households and businesses. How much economic damage COVID-19 ultimately does will depend on the trajectory of the virus—and how governments respond,” Zandi added.

A massive and mounting monetary and fiscal policy response will limit the economic damage in the US compared with much of the rest of the world, and Moody’s Analytics expects US lawmakers to provide $1.65 trillion in discretionary fiscal stimulus.

The Bank of England recently low­ered rates to the zero lower bound and the European Central Bank has maintained neg­ative rates since the crisis. Germany and the UK are implementing large fiscal stimulus packages, but the rest of Europe has little fiscal space to respond.

“Euro zone real GDP is expected to decline by nearly 3 percent in 2020,” it said, adding that emerging economies will be hammered given the collapse in oil and other commodity prices.

“Our baseline outlook for the global economy is increasingly pessimistic. Still, given how quickly events are moving and the high degree of uncertainty around the virus’ path, it may not be pessimistic enough,” Zandi added.

The report identifies three ‘critical unknowns’ that are crucial to understand and respond to the problem — the trajectory of the virus, the policy response, and what other problems may develop due to the extraordinary pressure on the economy and financial system.

“Our baseline outlook also depends on credit markets functioning reasonably well, albeit with significant support from the Federal Reserve. Liquidity in credit markets has become increasingly impaired, including the repo and commercial paper markets. If liquidity dries up, and short-term funding markets effectively close to large corporates that issue short-term debt and financial institutions that raise funds necessary for their own lending, the impact on the economy will be severe and immediate,” he added.

The high level of corporate debt is another threat, Zandi noted, adding that there are many large multinationals with strong balance sheets and little debt, but there are also many highly leveraged companies that will likely face a Hobson’s choice: make their debt payments in a timely way or cut payrolls and investment.

“Either way the economy will suffer. We assume these financial fault lines are not severe or persistent enough to materially weaken the economy. However, this is an increasingly tough assumption to make,” he stated.

As oil prices drop, India fills its strategic petroleum reserves: Report

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As crude oil prices hit fresh lows, India is building its strategic petroleum reserves of 5.33 million metric tons (MMT).

Around half of this capacity is full, a source told the paper. The total capacity is expected to meet the country’s requirements for about 9.5 days. However, with the coronavirus outbreak restricting the movement of men and material, the stock could last much longer. This stock will be in addition to the 64.5 days stock that domestic refiners typically maintain.

India recently purchased crude oil worth Rs 690 crore, an official told Hindustan Times.

“Average price of the contracted quantity of crude is around $30 per barrel,” another official told the publication. This is much lower than India’s average crude oil purchase price of $69.88 per barrel in 2018-19.

The report added that the government approved the construction of facilities at Chandikhol in Odisha (4 MMT) and Padur in Karnataka (2.5 MMT), which will provide additional crude oil storage for 11.57 days.

The government might also purchase oil from Saudi Arabia and Abu Dhabi, the report added.

“Talks are on with Saudi Arabia and we are awaiting a final nod from Riyadh,” the second official said.

India, which imports over 80 percent of its oil requirement, is trying to boost its capacity as it prepares to keep vehicles running during the coronavirus, or COVID-19, outbreak.

Moneycontrol could not independently verify the story.

Coronavirus pandemic | BofA cuts March quarter growth forecast to 4%

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Wall Street brokerage Bank of America Securities has cut its March quarter growth forecast by 30 bps to 4 per cent, amid coronavirus pandemic-driven shutdowns and expects a cut in key benchmark rates on or before the April 3 monetary policy review. The brokerage expects the pandemic-driven lockdowns to run through mid-April, crippling economic activities across the value-chain.

The agency also pegged down FY20 growth forecast to 4.7 per cent and FY21 to 5.1 per cent, respectively, assuming a 2.2 per cent global growth.

But if the global economy falls into a recession, the domestic economy is likely to fall further to 4.4 per cent in FY21, it warned.

The brokerage has also lowered its forecast for the June quarter (first quarter of 2020-21) by a sharper 80 bps to 4 per cent citing the pandemic impact on economic activities even as the government is taking measures to contain the spread of the deadly virus that has killed close to 8,000 people globally.

Back home, the country has so far been comparatively secure but the government and health authorities are expecting an implosion of the pandemic in the country over the next week.

The pandemic has already taken the lives of three people in the country and left hundreds in home and hospital quarantines.

“We cut our real growth forecast by 30 bps to 4 per cent for the March quarter and by 80 bps to 4 per cent in the June quarter on rising Covid-19-related shutdowns,” BofA Securities said in a note on Wednesday.

Its India economists Indranil Sen Gupta and Aastha Gudwani said their India Activity Indicator continues to point to a long bottom.

While growth has improved to 4.3 per cent in January from 3.5 per cent in December 2019, it is still below the 4.4 per cent printed in October-November.

Four of the seven components have improved in January from December, they said and warned that "although we had called that the worst is over after the November dataprints, the Covid-19-related shutdowns will likely pull down activity further".

Expecting an inter-MPC meeting rate cut of 25 bps before or at the scheduled April 3 review, they forecast two more repo cuts of 25 bps each in June and October, and said this is needed as high real lending rate is exerting a drag on growth.

The brokerage also blamed the rising real lending rates as the main villain delaying the fragile recovery.

On the rate cuts, they expect RBI to cut rates by 25 bps before/on April 3 as the US Fed has done so by a whopping 150 bps. The RBI will likely cut again in June with inflation set to fall to its 2-6 per cent mandate and the March quarter growth coming down to 4 per cent.

An October rate cut is likely as base effects and weak demand is expected to drag inflation down to 2.5 per cent in the first half of FY21, the note said.

FOREX-Yen firms in fresh flight to safety

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 The safe-haven yen gained sharply, but the dollar held onto hefty overnight gains against other currencies on Wednesday, as fears over the coronavirus pandemic kept markets frazzled despite massive injections of liquidity by central banks.

The yen JPY= rose 0.8% to 106.80 per dollar with a flight to safety in the Asia afternoon as stock markets around the region extended losses. MKTS/GLOB

The pound and euro were ahead, but struggled to win back more than a fraction of the ground ceded to the dollar on Tuesday. The Aussie and kiwi languished below 60 cents.

Markets have crumbled this month as investors liquidated nearly everything for cash - driving up the dollar's value and the cost of borrowing the greenback abroad.

"Funding strains are still there, and I think that is what's spooking the market still," said Moh Siong Sim, currency analyst at the Bank of Singapore.

The world is adopting a war footing as the pandemic spreads and country after country announces draconian lockdowns. The virus has killed over 8,000 people globally, while the total number of cases is approaching 200,000, a Reuters tally shows.

While crisis is also being met with massive fiscal and monetary policy measures, there are only tentative signs that it is working.

The Bank of Japan on Tuesday made its biggest injection of dollar funds since 2008, helping to reduce the cost of dollars, relfected in cross-currency basis swap spreads. spread on dollar/yen swaps JPYCBS3M= narrowed to around -58 basis points from 120 basis points on Tuesday.

Three-month euro/dollar cross-currency basis swap spreads EURCBS3M=ICAP had also fallen back overnight to 39 basis points from as high as 120 basis points.

But it failed to improve market sentiment.

"The newsflow is about as fluid as we have seen," said Chris Weston, head of research at Melbourne brokerage Pepperstone.

"It mirrors that of the (2008) financial crisis if not worse ... it's very difficult to deal with this and I think FX traders don't really know where to look at the moment."

The pound GBP= pared some gains to sit 0.4% higher at $1.2094 and the euro EUR= was steady at $1.1007.

Export exposed currencies fared much worse.

The Australian dollar AUD=D3 has lost nearly 15% against the greenback this year and fell below 60 cents for the first time since 2003 overnight. It last stood at $0.5930, while the kiwi NZD=D3 was $0.5942.

Traders have also been watching volatility in the U.S. Treasury market to get a sense of the demand for dollars.

The yield on benchmark U.S. 10-year Treasuries US10YT=RR soared 34 basis points overnight, the largest single-day rise since 2004. US/

"It all stems from a shortage of US dollars," said Gunter Seeger, senior vice president in investment-grade fixed income at New York asset manager PineBridge Investments.

"People are very, very nervous," Seeger said.

"Everyone's nervous about the virus, about oil prices, about their job, about everything."

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Indonesian’s Rupiah’s Freefall May Be About to Get Even Faster

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Indonesia’s currency has been in a free-fall, even defying the central bank’s intense market intervention. The decline may now gather further pace as demand for dollars climb from companies set to repatriate dividends.

With the foreign investors adopting a flight-to-quality approach, even the high real returns on Indonesian sovereign bonds won’t be enough to stop the rush to exit, according to I Made Budhi Purnama Artha, head of treasury at Maybank Indonesia in Jakarta. Bank Indonesia should pump in more dollars to prevent the rupiah from declining further and protect investor confidence, he said.

The rupiah has gone from being Asia’s best performing currency in January to the worst in the past month as a global sell-off sparked by coronavirus concerns deepened. On Tuesday, the currency weakened past 15,000 to a dollar for the first time since the emerging market rout in 2018, raising concerns even a near-record foreign exchange reserve and all-out central bank intervention may fail to ease the turmoil.

Foreign investors have pulled more than $4 billion from rupiah bonds this year, on course for the biggest quarterly outflow ever, and have dumped about $600 million of shares, contributing to the third trading halt within a week. With the risk-off sentiment guiding investors, an expected interest rate cut on Thursday may do little to reverse the sell-off.

The trajectory of rupiah will “depend on whether global financial markets will still be as volatile as this month in the future,” said Wisnu Wardana, an economist at PT Bank Danamon Indonesia. “Our base scenario for Covid-19 is it lasts in Indonesia for six months with a peak in May. Pressure on rupiah might increase especially if other countries succeed to contain the virus while Indonesia struggles.”

The rupiah fell as much as 0.3% to 15,224 to a dollar on Wednesday, extending losses this year to almost 9%. The yield on benchmark 10-year rupiah bonds was at 7.58%, near its highest level since August, according to data compiled by Bloomberg.

A second wave of outflows from Indonesian markets may come in April and May, when foreign companies typically repatriate their dividends. But with the U.S. Federal Reserve cutting rates by 100 basis points, the high carry on Indonesian may lure bank investors and cushion the impact, Maybank’s Artha said.

Indonesian bonds are a barometer of risk appetite with foreign investors owning about 35% of the nation’s total sovereign rupiah bonds.

Here’s what market strategists and economists are saying about the outlook for rupiah:

David Sumual, economist at PT Bank Central Asia

“Bank Indonesia has to ensure sufficient liquidity between the central bank and banks, banks and banks, banks and the real sector at different costs. The intervention using forex reserves can be done because the needs of dollars for trade are declining. Aside from what the bank has been doing now, they still have bilateral swap agreements and the Chiang Mai Initiatives as a second line of defense. The virus pandemic needs a strong fiscal response. The government would also need to consider issuing a decree if it needs to exceed the legal budget deficit of 3% of GDP.”

I Made Budhi Purnama Artha, head of treasury at PT Maybank Indonesia

“During limited liquidity, demand for dollars is relatively pretty high, resulting in continued rupiah weakening. Dollar demand also triggered by the sell-offs by equity and fixed income investors. The cut in Fed fund rate will make Indonesian assets relatively attractive again and has the potential to attract bonds investors to re-enter Indonesian market. This can offset demand from fleeing equity investors and demand for dollars which tend to rise in April-June on dividend payment.”

Wisnu Wardana, economist at PT Bank Danamon Indonesia

“The most important thing is to maintain dollar supply domestically. Therefore, the policy to reduce foreign currency reserve requirement should be appreciated. Under the current circumstances, the best course of action is to guide the value of financial instrument to its fundamental level.”

Josua Pardede, economist at PT Bank Permata

“The strengthening of the U.S. dollar against the rupiah and other developing country currencies is influenced by the anticipated global economic slowdown from Covid-19 after it being declared a global pandemic. In addition, the very aggressive response of the U.S. central bank also gave a negative signal to emerging market financial markets, including the Indonesian capital market.

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Forex - Yen Trades Lower as Asian Stocks Turn Green

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 Prices of the safe-haven yen fThe AUD/USD pair gained 0.2% to 0.6127. Minutes of the Reserve Bank of Australia’s (RBA) March 3 meeting said the central bank cut its benchmark interest rate and was ready to do so again as it became “increasingly clear” the coronavirus would cause major disruption to economic activity worldwide.


The central bank slashed the cash rate to 0.5% to provide support to the economy, according to the minutes, which also showed officials agreed on “the importance of monitoring the rapidly changing developments closely in subsequent weeks and maintaining contact to assess the implications” of the outbreak for the economy.


The RBA is set to announce further policies on Thursday this week. It is expected to cut rates to 0.25%. 


Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies was unchanged at 98.155 as traders await the Commerce Department to issue its report later in the day. 


Retail sales are expected to have risen 0.2% in February, down from a 0.3% rise in March, according to economists’ forecasts compiled by


Meanwhile, economists are looking for February industrial production to have risen 0.4% and capacity utilization to have ticked up to 77.1%.


The dollar was pressured on Monday after the Federal Reserve slashed interest rates to near zero late on Sunday and announced massive bond buying.

 ell on Tuesday in Asia as equity markets turned green after opening lower.

The USD/CNY pair inched up 0.1% to 6.9947. 

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