On Thursday 12 December 2013, Indonesia's central bank (Bank Indonesia) announced that the country's benchmark interest rate (BI rate) remains unchanged at the level of 7.50 percent in December 2013. This announcement was a bit surprizing as about 80 percent of analysts expected Bank Indonesia to raise the BI rate in order to support the depreciating Indonesia rupiah exchange rate. Starting the year at IDR 9,670 per US dollar, the rupiah has fallen around 25 percent to IDR 12,081 per US dollar.
Update COVID-19 in Indonesia: 23,165 confirmed infections, 1,418 deaths (26 May 2020)
26 May 2020 (closed)
USD/IDR (14,761) -13.00 -0.09%
EUR/IDR (16,180) +61.11 +0.38%
Jakarta Composite Index (4,626.80) +80.85 +1.78%
David Sutyanto is currently a research analyst at First Asia Capital in Jakarta where his main task is to deliver technical and fundamental analyses of Indonesia's capital markets. David holds a Certified Securities Analyst (CSA) certificate, and two licenses: a Broker Dealer Representative (WPPE) and an Investment Manager Representative (WMI). He is also an active member of the Securities Analysts Association of Indonesia (Asosiasi Analis Efek Indonesia). David studied economics at the Gunadarma University, which received the award for best private university in Indonesia.
|Institute|| First Asia Capital
|Position|| Research Analyst
|Expertise|| Stock Market | Technical Analysis | IDR Rupiah
Columns of David Sutyanto
In the last three months, Indonesia's benchmark stock index (IHSG) experienced continued selling pressures causing the index to plunge from a high of 5,215 to a low of 4,026. The country's economic slowdown and net selling by foreign investors triggered the rapid decline. Up to the third week of November, net selling of Indonesian stocks amounted to IDR 14.9 trillion (USD $1.3 billion). The looming winding down of the Federal Reserve's USD $85 billion per month bond buying program has brought significant negative market sentiments.
Last week, the Jakarta Composite Index (IHSG) weakened. The benchmark stock index of Indonesia was affected by negative market sentiments brought on by domestic factors. Most importantly, the large-scale demonstrations across Indonesia by Indonesian workers who demanded for higher minimum wages as annual inflation has surged since June 2013 after prices of subsidized fuels were raised. These demands, however, jeopardize the attractiveness of Indonesia's investment climate.
The Jakarta Composite Index (IHSG), the benchmark stock index of Indonesia, gained 0.61 percent and ended on 4,546.57 on Friday (18/10). Stock trade showed a consolidating trend with the value of transactions in the regular market amounting to IDR 4.39 trillion (USD $388.5 million). Considering the full trading week, the IHSG gained 0.60 percent with an average daily transaction value of IDR 4.18 trillion. This value is below the previous week's average of IDR 4,36 trillion.
It seems clear now how market conditions will be until the end of the year. Two important foreign issues - the US Federal Reserve's tapering of quantitative easing (QE3) as well as the US debt ceiling issue which resulted in a shutdown as the Democrats and Republicans failed to come to an agreement on the country's federal budget - and various economic data from Indonesia (inflation and the trade balance) have provided some more insight into the matter. I will discuss each topic one by one below.