Finally, some relief for Indonesian investors. After being beaten to a pulp the last couple of months, the Jakarta Index just rose over 7% in a single day. This volatility is giving me a headache.So what gives? Looks like an interest-rate-related bump. With global demand destruction taking place, and commodities slumping all over the world, that means downward pressure on prices instead of upward. That, in turn, means the Indonesian central bank doesn't have to be quite so diligent in tamping down inflation, because it's already moderating of its own accord. And that has market-watchers giddy that there might be big rate cuts on the way, which could lubricate borrowing and ease the money supply in these difficult times.
About time, since they've raised borrowing costs for six straight months, not something you want to do in the teeth of a possible depression. Don't get too excited about these wild upswings, though, since the market could just as easily swing back down again. One silver lining: They say that extreme volatility is a reliable sign that the stock markets have hit bottom. Let's pray, for the sake of our collective retirement savings, that that's the case ...
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