Immediately after the opening of trade on Wednesday (10/06), Indonesian stocks rebounded sharply. Yesterday, Indonesia’s benchmark stock index (Jakarta Composite Index) had fallen 2.30 percent due to worries about looming higher US interest rates later this year, the Greek debt crisis in the Eurozone, heavy rupiah depreciation, and weak domestic macroeconomic data (such as Indonesia’s high inflation, disappointing Q1-2015 economic growth, the still wide current account deficit, and the central bank’s falling forex reserves).

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Indonesian stocks declined more than expected during the first trading session on Tuesday (09/06). The benchmark Jakarta Composite Index plunged 3.12 percent to 4,858.31 points amid heightened expectation of a US interest rate hike as well as worries about the Greek debt situation in the Eurozone. The performance of other Asian stock indices was mixed on Tuesday morning with Shanghai, Singapore and South Korea showing modest gains, while New Zealand, Hong Kong, Malaysia and Taiwan were down marginally.

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In a meeting with Commission XI of Indonesia’s House of Representatives (DPR), Indonesian Finance Minister Bambang Brodjonegoro stated that the economy of Indonesia is currently facing four global risks. These four risks are low international commodity prices, China’s slowing economic expansion, the Greek debt crisis in the Eurozone and, lastly, further monetary tightening to be conducted by the US Federal Reserve. These issues are not new and have already contributed to slowing economic growth in Indonesia.

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Sebagian besar pasar saham Asia turun pada hari Rabu (27/05), termasuk Indeks Harga Saham Gabungan (IHSG). IHSG turun 0,95% menjadi 5.270,22 poin pada pukul 14:32 WIB. Performa yang buruk saham-saham di seluruh Asia hari ini mengikuti jatuhnya pasar saham Amerika Serikat (AS) kemarin. Dow Jones, S&P 500 dan Nasdaq semuanya menurunkan sekitar 1% karena kuatnya dollar AS setelah terbitnya sejumlah data perekonomian AS yang kuat (yang mendukung kenaikan suku bunga AS sebelum akhir tahun) dan meningkatnya kekuatiran mengenai krisis hutang di Yunani.

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Rupiah Indonesia memulai minggu perdagangan baru dengan catatan negatif. Pukul 10:45 WIB, rupiah telah melemah 0,17% menjadi Rp 13.181 per dollar AS menurut Bloomberg Dollar Index. Alasan utama untuk performa ini adalah karena dollar AS telah menguat secara global setelah Pimpinan Federal Reserve Janet Yellen menyatakan bahwa dia yakin akan terjadi kenaikan suku bunga as yang pertama sejak hampir satu dekade sebelum akhir tahun ini (asal data perekonomian AS terus membaik).

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Indonesian stocks continued to rise one day after the country’s central bank (Bank Indonesia) announced to leave the interest rate policy unchanged and, instead, choosing to loosen its macro-prudential policy by revising the LDR-RR regulation, LTV policy for mortgage loans and down payments on automotive loans, hence increasing liquidity and boosting credit growth in the banking sector. Indonesia's rupiah, however, depreciated sharply after the market opened on Wednesday (20/05) due to the strong US dollar.

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The central bank of Indonesia (Bank Indonesia) is currently dealing with a dilemma. On the one hand, its relatively high interest rate environment (with the benchmark BI rate at 7.50 percent) is partly responsible for the country’s slowing economic growth as credit expansion is curtailed and economic activity declines. On the other hand, Bank Indonesia’s high BI rate is needed to safeguard Indonesia’s financial stability as inflation is still above the central bank’s target, the current account deficit nearly unsustainable, and capital outflows loom.

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The Indonesian rupiah is again depreciating. On Tuesday (12/05), the rupiah had depreciated 0.39 percent to IDR 13,206 per US dollar by 11:51 am local Jakarta time based on the Bloomberg Dollar Index. The primary reason for this weak performance today is US dollar demand amid heightened concerns about Greece’s debt situation. Talks between the Greek leftist government and its international partners are heading toward a crucial phase. As a result, the greenback is appreciating against almost all Asian currencies.

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Bank sentral Indonesia (Bank Indonesia) mengumumkan pada hari Jumat (08/05) bahwa cadangan devisa Indonesia turun sebesar kurang lebih 700 juta dollar Amerika Serikat (AS) menjadi 110,87 miliar dollar AS pada akhir April 2015 (dari 111,55 miliar dollar AS dari bulan sebelumnya). Penurunan ini diakibatkan oleh pembayaran hutang luar negeri pemerintah dan juga usaha bank sentral untuk menstabilkan nilai mata uang rupiah akibat volatilitas saat ini dan ketidakjelasan keadaan ekonomi (global dan domestik). Di April, rupiah menguat 0,8% terhadap dollar AS.

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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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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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After market participants had time in the weekend to think over the 'rescue packages' of the Indonesian government and central bank (Bank Indonesia) that were released on Friday (23/08), they seemed unconvinced about the short-term impact of the packages. As a result, Indonesia's main stock index (IHSG) fell 1.18 percent to 4,120.67 points on Monday (26/08), which is the IHSG's lowest level since 7 September 2012. The Indonesian rupiah gained 0.06 percent to IDR 10,841 (Bank Indonesia's mid rate).

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Despite the announcement of an economic policy package aimed at overcoming the impact of global financial turmoil, Indonesia's main stock index (IHSG) was not able to end the week on a positive note, while the value of the rupiah on the spot market depreciated 1.68 percent to IDR 11,058 per US dollar on Friday (23/08) amid a majority of strengthening Asian currencies, including the Indian rupee (0.67 percent) and the Thai baht (0.28 percent). Based on Bank Indonesia's mid rate, the rupiah fell 4.4 percent against the US dollar to IDR 10,848 last week.

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The rebound that happened in the first session of Friday's trading day (23/08) gave hope that Indonesia's main stock index (IHSG) would end the disastrous week on a positive note. However, in the second session of the day market participants began selling Indonesian assets causing the index to fall again, although the fall was limited. In line with the Asian region, the index lost 0.04 percent to end at 4,169.83 points. Even the highly anticipated 'rescue package' of the Indonesian government was not able to support the index.

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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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After two days of growth, Indonesia's main stock index (IHSG) became victim of profit taking on Thursday (15/08). Particularly domestic investors were eager to sell their Indonesian assets. Falling indices on Wall Street on Wednesday (14/08) in combination with global uncertainty about the end of the Federal Reserve's quantitative easing program made a negative impact on Asian stock indices, including the IHSG. Indonesia's central bank's decision to keep its benchmark interest rate at 6.50% was well-received by most investors.

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Worldwide, most stock indices fell on Wednesday (07/08), particularly Japan's Nikkei index, after it has been speculated that the Federal Reserve may phase out the third round of its quantitative easing program in September 2013. This program, involving a monthly USD $85 billion bond-buying package, aims to spur US economic growth while keeping interest rates low. However, one important side effect has been rising stock markets around the globe. Now the end of QE3 is in sight, investors shy away from riskier assets.

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