At 15:00 local Jakarta time on Tuesday (01/04), the Indonesian rupiah exchange rate as well as the country's benchmark stock index (known as the IHSG or Jakarta Composite Index) have shown a positive performance so far. Based on the Bloomberg Dollar Index, the rupiah appreciated 0.64 percent to IDR 11,288 per US dollar, while the IHSG climbed 2.15 percent to 4,871.38. A number of internal and external factors contributed to this remarkable performance today.
Firstly, the positive performance of the rupiah and IHSG is part of a wider trend. After Chairwoman of the Federal Reserve Janet Yellen stated that the US bond-buying program (quantitative easing) will continue for a while, emerging market stocks and currencies have gained significantly. On Monday (31/03), Yellen said that the USA still needs the central bank's unprecedented monetary accommodation to curb unemployment and boost the world's largest economy. This caused speculation that US interest rates may not rise as quickly as previously estimated.
Meanwhile, China’s official March manufacturing was more-or-less stagnant at 50.3 from 50.2 in the previous month. According to HSBC Holdings Plc and Markit Economics, China's manufacturing slid from 48.5 to 48. This strengthened speculation that the government of China will implement more policies to support economic growth in the world's second-largest economy.
Lastly, concerns about the Crimea crisis have eased as Russian forces started to withdraw from the eastern border with Ukraine.
There were also internal factors that supported the rise of Indonesia's rupiah and IHSG on Tuesday (01/04). Statistics Indonesia (BPS) announced that inflation had eased further in March 2014. On a year-on-year basis, inflation now stands at 7.32 percent (down from 7.75 percent in February 2014). Moreover, Indonesia posted an unexpectedly large trade surplus in February 2014, thereby reducing concerns about the country's current account deficit. The trade surplus was recorded at USD $785 million in February. For investors it is a positive sign that the recently introduced export ban on unprocessed minerals has not been able to drag down the trade balance.
These new economic data may be a reason for Bank Indonesia to maintain its benchmark interest rate (BI rate) at 7.50 percent.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 1.17 percent on Tuesday (01/04) to IDR 11,271 per US dollar:| Source: Bank Indonesia