The Indonesian rupiah exchange rate has appreciated 0.50 percent to IDR 11,779 per US dollar by 16:00pm local Jakarta time on Monday (09/06). This performance is in line with the general trend in Asia where emerging market currencies strengthened against the greenback on today’s trading day. The rupiah is among today’s best-performing emerging currencies as it was boosted by the higher trade surplus of China (one of Indonesia’s most important trading partners) and economic growth in Japan.

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Indonesia's central bank (Bank Indonesia) said that it expects the Indonesian rupiah exchange rate to trade between IDR 11,600 and IDR 11,800 per US dollar throughout the fiscal year of 2014. Governor of Bank Indonesia Agus Martowardojo said that this assumption is based on pressures that originate from Indonesia's current account deficit. In 2013, the current account deficit hit USD $29.09 billion, or 3.33 percent of the country's gross domestic product (GDP). The current account balance has a major influence on the performance of a currency.

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One day after the official announcement that two pairs will compete in the presidential election (9 July 2014), the benchmark stock index of Indonesia (Jakarta Composite Index or IHSG) and the Indonesian rupiah exchange rate are still in a state of decline. Although yesterday (19/05) the rupiah and IHSG strengthened considerably prior and shortly after Joko "Jokowi" Widodo declared that Jusuf Kalla would be his running mate (the vice-presidential candidate) in the election, markets have been selling Indonesian assets since Monday afternoon.

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Both the Indonesian rupiah exchange rate and the country's benchmark stock index (known as the Jakarta Composite Index or IHSG) have strengthened significantly on Wednesday's trading day (14/05). The rupiah appreciated 0.76 percent to IDR 11,450 per US dollar by 15:00 local Jakarta time according to the Bloomberg Dollar Index. Meanwhile, the IHSG gained 1.09 percent to 4,975.13 by the same time. Main reason for this strong performance is the official declaration of the PDI-P to form a coalition with NasDem and PKB.

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The Indonesian rupiah exchange rate continued its recent depreciating trend on Thursday (08/05). According to the Bloomberg Dollar Index, the currency had depreciated 0.36 percent to IDR 11,619 per US dollar at 13:30 local Jakarta time. Apart from market participants' wait and see attitude ahead of results of Bank Indonesia's Board of Governors Meeting, which is held today and will inform whether the current benchmark interest rate of 7.50 percent will be maintained, increased concerns about exports to China also put pressure on the rupiah.

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On Wednesday morning (30/04), the Indonesian rupiah exchange rate had appreciated 0.11 percent to IDR 11,536 per US dollar based on the Bloomberg Dollar Index at 9:15 local Jakarta time. On Tuesday (29/04), Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.18 percent to IDR 11,589 against the US dollar. Today's JISDOR will be released by the central bank of Indonesia around noon local Jakarta time.

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Based on the Bloomberg Dollar Index, the Indonesian rupiah exchange rate appreciated 0.23 percent to IDR 11,603 per US dollar on Thursday (24/04). The currency's performance was particularly influenced by weak new US single-family homes sales. These sales fell more than expected and hit a five-month low in February 2014, implying that there is continued weakness in the US housing market. Meanwhile, US durable goods orders and US initial jobless claims, which will be released later today, are expected to be weak too.

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The Indonesian rupiah exchange rate continued its recent weakening trend on Wednesday (23/04). Based on the Bloomberg Dollar Index, Indonesia's currency had depreciated 1.12 percent to IDR 11,650 per US dollar at 12:45 local Jakarta time, its weakest level in two months. Reasons for this poor performance are weak Chinese manufacturing data, renewed concerns about Indonesia's wide current account deficit and ongoing political uncertainty after the fragmented outcome of Indonesia's 2014 parliamentary election.

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Most emerging currencies in Asia appreciated against the US dollar on Monday (07/04) as the 192,000 jobs that were added by US employers in March 2014 are believed to be too low to trigger an early interest rate hike by the US Federal Reserve. The new jobs data did not meet expectation, particularly after the strong US private jobs report. Meanwhile, trading in Asia was subdued as China's financial markets were closed (due to the Qingming Festival also known as Tomb Sweeping Day).

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The Indonesian rupiah exchange rate moved rather sideways on Friday (04/04). Based on the Bloomberg Dollar Index, the currency appreciated 0.06 percent to IDR 11,316 per US dollar. Most emerging Asian currencies tended to depreciate against the greenback as the market is waiting for US unemployment data, released later today. Overall, market participants remain confident in Indonesia's economic fundamentals as inflation eased to 7.32 percent (yoy) in March, while the country posted a trade surplus of USD $785 million in February.

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The decision of Indonesia's central bank (Bank Indonesia) to raise its benchmark interest rate by 50 basis points to 7.00 percent and its deposit facility (Fasbi) by 0.50 percent to 5.25 percent seem to have had a good impact on the value of Indonesia's stocks and the rupiah. Indonesia's benchmark stock index (IHSG) rose 2.23 percent to 4,195.09 points on Friday (30/08), implying a three-day winning streak. Since the first trading day of this year, the IHSG is down 3.47 percent.

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For the second day in a row Indonesia's benchmark stock index (IHSG) was able to post a gain. Today, it rose 1.92 percent to 4,103.59 points. This rebound is possibly the result of the higher key interest rate. Yesterday, it was announced that the central bank (Bank Indonesia) scheduled an extra meeting to discuss monetary policy. Immediately speculation emerged that the BI rate might be raised by 50 basis points. And indeed it was raised, much to the liking of many investors and analysts.

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The government of Indonesia has revised the macroeconomic assumptions that are stated in the State Budgets (APBN) of 2013 and 2014 after a meeting with the budgetary body of the House of Representatives (Badan Anggaran DPR) on Wednesday (28/08). It is the third time that the 2013 State Budget has been revised in order to put it more in line with recent global developments. As the government was also too optimistic when drafting the 2014 Budget, it felt the need for a revision (only 12 days after the announcement of the Budget).

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Although Indonesia is one of the victims of the reversal of investment flows from emerging markets to developed markets, it is still far from a crisis. Global uncertainty regarding the possible ending of the Federal Reserve's monthly USD $85 billion bond-buying program (QE3) and, to a lesser extent, the possible invasion of the US in Syria have worried investors and resulted in the withdrawal of funds from emerging markets. Funds are flowing back to western developed countries that have recently been showing signs of continued economic recovery.

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Most of us who were hoping for a limited weakening of Indonesia's benchmark stock index (IHSG) today (27/08) were to be disappointed. Instead of a limited decline, the IHSG fell 3.71 percent to 3,967.84 points. Market participants are concerned about both the global and domestic economy, thus pulling money out from Indonesia. The weakening rupiah and weak stock index openings in Europe (due to tensions in Syria) pushed the IHSG further down into red territory. Foreign investors were again net sellers of Indonesian assets.

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Similar to the Indonesian government, Indonesia's central bank also announced a fiscal policy package to support sustainable nationwide economic growth by curbing inflation, maintaining a more sustainable balance of payments as well as strengthening financial system stability. These additional policies are expected to synergise with the policy package unveiled by the government on Friday (23/08). These measures were taken as both the rupiah and Indonesia's main stock index (IHSG) are in a downward spiral.

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Today's release of the economic rescue package was not able to put Indonesia's main stock index (IHSG) into green territory. Also, the Indonesian rupiah maintained its losing streak. The IHSG fell 0.04 percent to 4,169.83 points. Interestingly enough, the IHSG was rising previous to the release of the package. After the release, however, it started to weaken slightly, which seems to indicate that market participants were a bit disappointed with the contents of the package as it contained no quick fixes to the economy.

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On Thursday (22/08), Indonesia's main stock index (IHSG) was not able to continue the rebound that occurred yesterday when the country's biggest pension fund, Jamsostek, began buying blue-chip stocks in a move to support the ailing index. Indonesia's benchmark index has now lost about 20 percent since its record peak in May 2013. Today, it fell 1.11 percent to 4,171.41 points. Eight sectoral indices weakened, of which the top losers were construction (-5.78 percent), basic industry (-3.42 percent), and finance (-2.39 percent).

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Concerns about Indonesia's weakening rupiah intensified on Wednesday (21/08) as the currency is now balancing on the psychological boundary of IDR 11,000 per US dollar. The rupiah continued its downward spiral today although its decline was limited due to the intervention of Indonesia's central bank (Bank Indonesia) that started selling US dollars again in an effort to support the rupiah. According to data compiled by Reuters, the rupiah has now fallen 10.7 percent this year.

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On Tuesday (20/08), Indonesia's benchmark stock index (IHSG) continued its decline with its fourth consecutive day of losses. Amid major concerns about Indonesia's economic growth, high inflation, tighter monetary policy and current account deficit, the IHSG fell 3.21 percent to 4,174.98 points. It means that the index now stands about 21 percent lower than its record peak in May 2013. Foreign investors have been pulling money out of the Indonesian market. According to Bloomberg, about USD $255 million has been retracted in the last two days.

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