On Wednesday (15/01), Indonesia's rupiah exchange rate depreciated 0.37 percent to IDR 12,095 per US dollar at 14:15 local Jakarta time. Global markets are again in anticipation of the Federal Reserve tapering issue after the Fed officials of Philadelphia and Dallas stated that they support an as-soon-as-possible winding down of the US stimulus program after the release of strong US retail data. The tapering will make it very hard for emerging currencies to gain against the US dollar. At 28-29 January, the Federal Reserve will hold its next meeting.
US retail sales exceeded analysts' expectations (0.2 percent growth in December 2013). This may lead to a quickening of the Federal Reserve tapering and is therefore expected to translate into a stronger US dollar (in relation to Asia's emerging currencies including the rupiah).
The central bank's Jakarta Interbank Spot Dollar Rate (JISDOR) depreciated 0.25 percent to IDR 12,077 per US dollar on Wednesday (15/01). However, compared to a week ago, this mid-rate of the central bank has appreciated 1.24 percent against the US dollar.
The rupiah performed well in the first days of this week due to several positive domestic factors. The country's foreign exchange reserves rose to USD $99.4 billion amid a November 2013 trade surplus, thus easing the wide current account deficit. Market participants also reacted positively to the implementation of the raw mineral export ban (after President Susilo Bambang Yudhoyono signed a last-minute regulation which permits continued exports of specific minerals provided companies will build smelters in the next three years). Weaker US nonfarm payrolls (released last week) were also a contributing factor behind the stronger rupiah.
Indonesia Stock Exchange
During the first trading session on Wednesday (15/01), the benchmark stock index of Indonesia (the Jakarta Composite Index) rose 1.25 percent to 4,445.47 points. The index reacts to global stock markets that were up after the release of positive US retail sales.
So far, this week has been good for the Jakarta Composite Index. On Monday (13/01), it rose 3.19 percent (Tuesday the stock market was closed due to a public holiday).