The Jakarta Composite Index (Indonesia's benchmark stock index, abbreviated IHSG) made a positive start on Monday (25/11). Investors were confident amid today's rising indices throughout Asia, brought on by the record breaking Dow Jones Index on Wall Street at the end of last week. However, this market optimism failed to provide a significant boost to the IHSG as the Indonesian rupiah exchange rate continued its downward spiral. The IHSG was up 0.39 percent to 4,334.80 points at the end of Monday's trading day.
In recent weeks, investors have been very cautious to invest in Indonesia's stock exchange and therefore the IHSG has failed to follow the general trend of Asian indices on various occassions. Moreover, recently, a day of gain is immediately followed by profit taking the following day.
On Monday (25/11), foreign investors continued to record a net sell, while domestic investors bought more Indonesian shares than they sold.
| Source: Bank Indonesia
The depreciating Japanese yen provided positive sentiments for the Nikkei index, which continued its upward trend and provided support to other indices in Asia. Moreover, Asian indices were supported by the agreement between the USA and Iran in which the latter accepted constraints on its nuclear program in exchange for partial relief from sanctions. China's benchmark index, however, failed to join the Asian trend today as the world's second-largest economy's energy stocks plunged.
The slowly recovering US economy has an important side effect, which is that market participants are more eager to buy US dollars than other currencies. Today, the Indonesian rupiah continued to depreciate against the US dollar. Bank Indonesia's mid rate fell 0.14 percent to IDR 11,722 per US dollar. The depreciation of other currencies, including the pound sterling (weakened by the lower BBA mortgage approvals), as well as the Eurozone's euro and Japanese yen (both affected by its central banks that intend to maintain low interest rates), contributed to the falling rupiah exchange rate.