This rescue package, which was released on Friday (23/08), aims at protecting Indonesia's economy from the impact of global economic turmoil, especially now the Federal Reserve is likely to limit its quantitative easing program which will imply a stop to the inflow of cheap money into Indonesia. In fact, it will cause an outflow from emerging economies (asset dumping), resulting in weakening regional currencies and stock markets.

The Indonesian rupiah weakened slightly in line with weakening Asian currencies after the release of the Federal Reserve Minutes last week. The minutes seem to indicate that the Fed is ready for a scaling back of the bond-buying program. Matters that intensified negative sentiments in Asian markets were Thailand's slip into recession in Q2-2013 and Malaysia's current account deficit. Although at the start of the day the rupiah rose, after the announcement of the government's rescue package, it slipped again, possibly because market participants are still not sure about how the package will be implemented. Indonesia's central bank also announced measures to support the rupiah through a strengthening of liquidity in the country's banking sector.

| Source: Bank Indonesia

Asian stock indices were mixed at the end of the week. China's indices were down. Despite an increase in the country's foreign direct investments, China's market fell because of a tightening of liquidity in the financial sector. Japan's Nikkei index rose sharply after the Yen depreciated ahead of the meeting of Japan's central bank, which is expected to discuss monetary easing.