A lower net interest margin (NIM) means that banks' profitability will decline (which also affects dividend payouts). For equity investors this is reason to ignore Indonesia's financial sector temporarily. Since late last week, when Indonesia's financial authorities unveiled their plans to curtail the NIM of state-controlled banks (and which will impact indirectly on the country's private commercial banks) investors have been dumping shares of local banks. Shares of Bank Rakyat Indonesia (BRI) plunged 3.42 percent, shares of Bank Mandiri fell 1.60 percent, shares of Bank Tabungan Negara fell 1.02 percent, and shares of Bank Negara Indonesia (BNI) fell 0.90 percent.

However, this is expected to be short-term turmoil only as Indonesia's banking sector still has a positive outlook given ongoing expectation of accelerated overall economic growth in 2016 in Indonesia and the government's push for infrastructure development across the nation (which will require loans from banks). Lastly, Bank Indonesia not only cut its benchmark interest rate (BI rate) by 25 basis points to 7.00 percent at its February 2016 policy meeting but it also cut commercial banks' rupiah denominated primary reserve requirement by 100 basis points to 6.50 percent (effective per 16 March 2016). This provides room for banks to channel more loans.

Meanwhile, China's Shanghai Composite Index fell from a one-month high after its central bank (People's Bank of China) devalued the yuan's daily reference rate by 0.17 percent, the most in six weeks.

Concerns about oil surged - despite the higher oil prices on Monday - after the International Energy Agency said there will continue to exist a global supply glut into 2017, hence limiting chances of a price rebound. On Tuesday benchmark US crude oil declined 2 percent to USD $32.73 per barrel (after surging USD $1.56 to close at $33.39 per barrel on the preceding trading day). Meanwhile Brent crude, used to price international oils, declined USD $0.58 to USD $34.11 per barrel.

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.47 percent to IDR 13,397 per US dollar on Tuesday (23/02).

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia