Bank of Indonesia (BI) includes phenomena money is king in five things Indonesia needs to watch out for next year due to the turmoil economy global.
comprehend, Cash he is the king This reflects the public belief that cash is more valuable than other capital goods. This phenomenon occurs due to the high uncertainty.
“Due to the perception of high risk, global investors are withdrawing funds from emerging market including Indonesia, and put it into liquid investment, which is close Cash‘ said BI Governor Perry Warjiyo in a Sniar on Bank Indonesia’s 2023 economic outlook and policy mix directions on Friday (2/12).
Quoting from Investopedia, expression money is king often used when the price in the stock market is high and the investor decides to save when the price is lower.
The term can also refer to a company’s balance sheet or cash flow where a lot of cash is usually a positive sign. Meanwhile, strong cash flow allows companies to be more flexible in terms of business decisions and potential investments.
Use of the term money is king can also refer to a form of payment. Many businesses only accept cash as a form of payment, not credit cards or checks. Then the expression appears money is king.
Investors who love the term money is king will choose to buy short-term debt instruments or certificates of deposit over buying high-priced securities.
If using a liquidity strategy, investors should work with a financial planner to estimate future liquidity needs and inflation rates.
In recent years, following the global financial crisis, tech companies like Apple and Amazon have hoarded cash on their balance sheets rather than spending it.
In 2017, Amazon poured huge sums of money to buy Whole Foods and sent panic throughout the food industry and temporarily crashed the shares of companies like Kroger. Cash gives Amazon the power to make those big buys and disrupt the market.
Financial Planner Advisor Alliance Group (AAG) Indonesia Dandy said that the possibility of a recession in the near future could certainly affect the market.
He said that in order to be prepared for this situation, it is best not to be too greedy in making decisions, including the choice of investment instruments.
According to Dandy, cash might be an option. This is because cash is a long-term investment tool that won’t be affected too much during a recession.
“Because Cash it is certain that the money is not going anywhere and can be prepared when a recession hits,” he told CNNIndonesia.com.
In addition to phenomena money is kingthere are four other risks that BI should pay attention to in 2023. First, world economic growth is declining and the risk of recession is also increasing in the United States (USA) and Europe.
According tohigh rates of inflation in many countries. ThirdUS central bank interest rate hike The Fed and other developed country central banks are expected to continue into next year.
“Fourth“This is related to the strengthening of the US dollar, which is so strong that it is putting downward pressure on various currencies, including the rupee,” Perry said.
Perry said that amid these global risks, BI remains optimistic by implementing an optimal policy mix and partnering with government.
(skt/agt)
