The Indonesian rupiah depreciated sharply, while the country’s stocks fell. According to the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.86 percent to IDR 13,148 per US dollar on Thursday (07/05). This performance was in line with the performance of other Asian currencies. Of the 11 Asian currencies that are followed by Bloomberg, only Japan’s yen appreciated against the US dollar. The Indian rupee was the worst performer today, weakening 1.06 percent against the greenback.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) is again plagued by selling pressures on Wednesday’s trading day (29/04). After today’s first trading session the index was down 2.58 percent to 5,106.73 points. The decline is caused by the persistence of the negative sentiments that have been felt over the past couple of days (explained below) coupled with a discrepancy in economic growth forecasts between the Indonesian government and the country’s central bank (Bank Indonesia).

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Most Southeast Asian stock markets declined ahead of the two-day policy meeting of the US Federal Reserve which started today (28/04). Indonesia’s benchmark Jakarta Composite Index (IHSG) managed to limit losses. After the 3.49 percent fall yesterday, the IHSG was down 1 percent after the first trading session today. However, near the closure of the market the index improved markedly resulting in a small loss of 0.06 percent only. Due to severe losses over the past couple of trading sessions, some oversold blue chip shares became attractive.

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Over the past week the Indonesian rupiah depreciated 0.60 percent to IDR 12,941 per US dollar (Jakarta Interbank Spot Dollar Rate). At the start of the week the rupiah experienced severe pressure as market participants were concerned about Indonesia’s slowing economic growth. However, in the second half of the week, Indonesia’s currency somewhat improved as the US dollar was negatively affected by weak US economic data. Based on the Bloomberg Dollar Index, the rupiah finished at IDR 12,922 per US dollar on Friday (24/04).

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In line with other Asian emerging market currencies, the Indonesian rupiah is depreciating against the US dollar on Monday’s trading day (20/04). According to the Bloomberg Dollar Index, Indonesia’s currency had depreciated 0.25 percent to IDR 12,882 per US dollar at 13:00 pm local Jakarta time. However, Head of Research at NH Korindo Securities Reza Priyambada believes that the currency cannot depreciate much further as positive economic data provides enough support for the rupiah.

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Over the past two days the Indonesian rupiah has performed strongly against the US dollar. The primary reason for this performance is Indonesia’s March trade surplus. On Wednesday (15/04), Statistics Indonesia announced that the country’s March trade surplus totaled USD $1.13 billion. This is Indonesia’s fourth straight monthly trade surplus and the highest one since December 2013. Moreover, the USD $1.13 billion March surplus was nearly twice the size that analysts had forecast previously.

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Indonesian stocks and the rupiah are performing well on Monday’s trading day (06/04) after weak US economic data suggests that the US central bank (Federal Reserve) will still refrain from raising its key interest rate too soon. Weaker-than-expected US jobs data caused that most Southeast Asian stock markets strengthened today. Moreover, the rupiah also felt the positive impact. According to the Bloomberg Dollar Index, the rupiah had appreciated 0.54 percent to IDR 12,950 per US dollar by 15:17 pm local Jakarta time.

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Indonesian stocks continued to climb strongly after the market opened on Tuesday (31/03). The country’s benchmark Jakarta Composite Index (IHSG) surged nearly one percent. Several external and internal factors are at play here. Firstly, the US Federal Reserve indicated over the past week that it may not raise its key interest rate too soon, leading to investors’ appetite for emerging market assets. Secondly, Chinese policymakers provided room for increased infrastructure spending and monetary stimulus.

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Whereas the Indonesian rupiah is depreciating on Monday’s trading day (30/03), Indonesian stocks climb significantly. At 14:15 pm local Jakarta time, the benchmark stock index (Jakarta Composite Index) had gained 0.93 percent to 5,444.27 points. In line with other Asian markets, Indonesia’s stock index felt the positive impact of Fed Chief Janet Yellen’s statements on Friday (27/03). Yellen indicated in a speech in San Francisco that it is riskier to raise US interest rates too fast than to raise them too slowly.

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Despite some protests in Indonesia’s capital city of Jakarta, the Indonesian government raised the price of subsidized low-octane gasoline (premium) from IDR 6,900 (USD $0.53) per liter to IDR 7,400 (USD $0.56) over the weekend (a 7.2 percentage point price increase). Meanwhile, the price of subsidized diesel (solar) was raised from IDR 6,400 (USD $0.49) to IDR 6,900 per liter (+7.8 percent). The price increase was considered necessary as crude oil prices had increased over the past month, while the rupiah continued to depreciate.

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Over the past week, the Indonesian rupiah continued to appreciate against the US dollar. Based on the Bloomberg Dollar Index, the rupiah appreciated 0.07 percent to IDR 12,850 per US dollar on Friday (17/04). Only a month ago, investors and policymakers were alarmed when the rupiah touched IDR 13,245 per US dollar, a 17-year low. This column discusses the factors that caused the strengthening of the rupiah in recent weeks. However, amid looming further monetary tightening in the USA, this development should be short-term only.

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Kalau kita melihat aktivitas pasar rupiah, sangat jelas bahwa beberapa trend telah mulai terjadi. Terhadap dollar Amerika Serikat (AS), rupiah menunjukkan pelemahan selama ini. Banyak investor mulai melihat bahwa pelemahan rupiah sudah overdone dan kita mulai melihat para analis yang menyuarakan bahwa rupiah akan menguat dalam beberapa bulan ke depan. Namun ada juga argumen melawan prospek ini dan penting bagi siapa pun yang berinvestasi di aset-aset Indonesia untuk memahami beberapa faktor ini, untuk bisa mengambil posisi yang tepat.

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The central bank of Indonesia (Bank Indonesia) stated that, besides global volatility caused by uncertainty about the timing of higher US interest rates, the rupiah has been - and remains - under pressure due to Indonesia’s increasing private sector debt and the wide current account deficit. Moreover, as subsidiaries of multinational companies in Indonesia tend to send back dividends to the foreign parent companies in the second quarter (implying rising US dollar demand), the rupiah is plagued by additional pressures up to June.

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The Indonesian rupiah exchange rate continued to depreciate on Monday (02/03). According to the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.30 percent to IDR 12,970 per US dollar, a six-year low. Apart from general bullish US dollar momentum in recent months (amid monetary tightening in the USA), the rupiah weakened due to Bank Indonesia’s signals that it tolerates a weaker currency in a move to boost exports (limiting the country’s current account deficit), and due to China’s interest rates cut.

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Positive macroeconomic data of Indonesia - involving the significantly lower trade deficit in 2014 and easing inflation - had a good impact on the Indonesia rupiah exchange rate on Tuesday (03/02) although prior to closing the currency somewhat slid after Australia's central bank cut its interest rates causing speculation of further policy easing around the Asia Pacific region in a move to support sluggish growth and avert deflation. Most emerging Asian currencies strengthened on Tuesday against the US dollar on stronger risk appetite.

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The Indonesian rupiah exchange rate depreciated on Wednesday (14/01) as global oil and other commodity prices continued to fall thus casting a negative spell on Indonesia’s currency. The rupiah depreciated 0.11 percent to IDR 12,614 per US dollar according to the Bloomberg Dollar Index. Market participants are concerned about the negative influence of low commodity prices on Indonesia’s export performance. Southeast Asia’s largest economy has had to cope with a wide trade and current account deficit in recent years.

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In line with the performance of other Asian emerging currencies, Indonesia's rupiah exchange rate appreciated on Monday (12/01) as the fall in US wages (released late last week) caused speculation that the Federal Reserve will - for now - delay its plan to start raising US borrowing costs. Despite solid growing US non-farm payrolls in December 2014, US wages (average hourly earnings) fell the most in eight years. Indonesia’s rupiah appreciated 0.38 percent to IDR 12,599 per US dollar according to the Bloomberg Dollar Index.

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The Indonesian rupiah exchange rate and Indonesian stocks gained on the last trading day of the week in line with the performance of other emerging markets. Indonesia’s benchmark stock index (Jakarta Composite Index, abbreviated IHGS) rose 0.09 percent to 5,216.67 points, while the rupiah appreciated 0.22 percent to IDR 12,647 according to the Bloomberg Dollar Index. The positive performance was mainly caused by speculation that the unexpected fall in US wages will keep the US central bank from raising its key interest rate soon.

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Both the Indonesian rupiah exchange rate and stocks continued to fall on Tuesday (06/01) as global conditions remained unconducive. Indices on Wall Street had declined sharply yesterday as the global oil prices fell below USD $50 per barrel fueling concerns about a weaker global economy. Similarly, most Asian stock indices declined as Japan's yen appreciated and energy stocks were sold by investors. Indonesia’s benchmark Jakarta Composite Index fell 0.98 percent to 5,169.06 points.

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Indonesia’s benchmark stock index (Jakarta Composite Index) fell 0.43 percent to 5,220.00 points on Monday (05/01) amid profit taking on a relatively quiet trading day on the Indonesia Stock Exchange. Meanwhile, the Indonesian rupiah exchange rate depreciated 0.55 percent to IDR 12,614 per US dollar according to the Bloomberg Dollar Index as concerns about Greece exiting the euro intensified and boosted US dollar demand. Moreover, market participants were still reacting to Indonesia’s latest trade and inflation data.

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