Indonesian assets are leading declines in Asia's equity and currency markets on today's trading day after a 'hawkish' statement released by the Federal Reserve indicated that the US will not raise its Fed Fund Rate yet, but does seem to open a door to a December interest rate hike. Despite the good performance of US stocks on Wednesday (28/10), most Asian markets were down today. Moreover, solid factory output in Japan reduced chances of further stimulus measures in Japan (Japan's central bank is to meet this Friday).
In the Federal Reserve's latest statement, after the two-day policy meeting (FOMC), it dropped language that expresses concern about global economic conditions, giving rise to speculation that the US central bank remains committed to its earlier plan to raise US interest rates before the year-end. The Fed continues to monitor the pace of US hiring and inflation to determine “whether it is appropriate to raise the target range” for its Fed Fund Rate at its December meeting.
Indonesia's benchmark Jakarta Composite Index led declines among Asian stock indices, slipping 1.95 percent to 4,518.98 points in the first trading session on Thursday (29/10).
The US dollar also strengthened against most currencies. Based on the Bloomberg Dollar Index, the Indonesian rupiah had depreciated 0.65 percent to IDR 13,568 per US dollar by 12:20 pm local Jakarta time on Thursday (29/10).
However, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.50 percent to IDR 13,562 per US dollar on Thursday as it still needs to absorb markets' response to the latest policy statement from the Federal Reserve.
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia