Although Indonesia’s September 2014 inflation (0.27 percent m/m) and appreciating rupiah exchange rate had a positive impact on the performance of Indonesia’s benchmark stock index (Jakarta Composite Index, abbreviated IHSG) on Wednesday (01/10), its gain was limited by declining indices on Wall Street on the previous day as well as Indonesia’s August trade deficit (USD $318.1 million), which resulted in foreign net selling of worth IDR 388 billion of Indonesian stocks. The IHSG climbed 0.06 percent to 5,140.91 points.
Low inflation in September led to improving finance and property shares. Shares in the property sector rose 1.27 percent, while finance sector stocks rose 0.76 percent. The country’s year-on-year inflation, however, rose to 4.54 percent in September 2014 (from 3.99 percent y/y in the previous month).
Although the US dollar appreciated against the Japanese yen and the euro, the US currency depreciated against the Indonesian rupiah. Market participants sold yens after economic data signal that the economy of Japan is still slowing, while the euro depreciated on expectation that the European Central Bank will provide stimulus. The rupiah strengthened on low September inflation and expectation that the central bank of Indonesia (Bank Indonesia) will maintain its key interest rate at 7.50 percent in October.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.19 percent to IDR 12,188 per US dollar on Wednesday (01/10).