Indonesia's main stock index (IHSG) was able to continue its rise on Thursday (11/07) despite mixed markets in the United States and Europe, that were waiting for the release of the Federal Reserve minutes, on the previous day. The minutes and Ben Bernanke's speech indicate that the bond-buying program will be continued for a while and this made investors decide to buy Indonesian assets, particularly large cap stocks such as Unilever Indonesia, Bank Mandiri and Indocement Tunggal Prakarsa.
Even Bank Indonesia's decision to raise its benchmark interest rate (BI rate) by 50 bps to 6.50 percent did not negatively impact on most finance stocks. Another interesting fact is that foreign investors were buying more Indonesian shares than they sold on Thursday, which is a rare event in the last month, and helped the index to go up. The IHSG rose 2.80 percent to 4,604.22 points.
The IDR rupiah continued to weaken against the US dollar after the decision of Indonesia's central bank to raise its key interest rate to 6.50 percent, although it should provide ammunition to support the rupiah. Moreover, the US dollar also weakened slightly after the release of the Fed minutes which indicate that the stimulus program will be maintained for a while as specific economic indicators of the USA are considered not conducive yet (unemployment rate). The weakening of the rupiah was also influenced by the lower Japanese yen after the Bank of Japan pumped liquidity in the market.| Source: Bank Indonesia
Most Asian stock indices were up as the market responded positively to the Federal Reserve's messages and because Japan increased liquidity into the financial markets. Investors are also pleased to know that China will try to boost its economy after both export and import numbers fell in the world's second largest economy.
Both American and European stock indices were mostly up on Thursday (11/07) as the market responded positively to Ben Bernanke's message that low inflation in combination with a high unemployment rate necessitates the need to continue the quantitative easing program for a while. The Dow Jones index rose 1.11 percent, S&P 500 rose 1.36 percent and Nasdaq gained 1.63 percent.