Investors' confidence in Indonesia's rupiah restored over the past three days after markets began to believe that the US Federal Reserve has little scope to raise its key Fed Fund Rate this year (due to weak US non-farm payrolls and US ISM non-manufacturing PMI). Bank Indonesia's role should also be highlighted. Indonesia's central bank intervened heavily (through currency swaps and by using its foreign exchange reserves) to stabilize and keep the currency from weakening toward and beyond the IDR 15,000 per US dollar level. This tells investors that Bank Indonesia will not allow a worse decline.

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Indonesia again led gains in Asia amid global relief due to the possible delay in an US interest rate hike. Indonesia's benchmark Jakarta Composite Index rose 2.35 percent to 4,445.78 points, while the Indonesian rupiah appreciated 1.81 percent to IDR 14,241 per US dollar according to the Bloomberg Dollar Index on Tuesday (06/10). After seeing the release of weak US non-farm payrolls on Friday (02/10) - triggering the assumption that US labor conditions are not strong enough to absorb an interest rate increase - global equity markets and emerging market currencies rebounded.

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Indonesian stocks and the rupiah continued to strengthen sharply on Tuesday morning on global relief after weak US jobs growth data were released last Friday (02/10) dimming chances of a Federal Reserve interest rate hike before the end of the year. Yesterday, Asian markets, Wall Street and Europe all surged. Moreover, with US interest rates remaining at between 0.00 and 0.25 percent in the foreseeable future, investors are attracted by higher-yielding emerging market assets such as Indonesian stocks and the rupiah.

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Indonesian stocks and the rupiah experienced a remarkable rebound on Monday (05/10) as global markets were relieved to see weak US jobs growth data at the end of last week. On Friday (02/10), it was announced that US September non-farm payrolls stood at 142,000, far below the market consensus of 203,000. Most investors now believe that the US Federal Reserve has too little scope to raise its key interest rate before the end of the year or even before the second quarter of 2016.

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