Despite further slowing economic growth in 2014 and possible rupiah depreciation ahead of higher US interest rates later this year, global ratings agency Moody’s Investor Service said that the outlook for Indonesian companies is stable in terms of foreign exchange risks. Brian Grieser, Vice President and Senior Analyst of Corporate Finance at Moody’s, believes that weak rupiah performance is manageable for most of these companies. Starting from mid-2013, Indonesia’s rupiah has depreciated significantly amid US monetary tightening.

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Governor of Indonesia’s central bank (Bank Indonesia) Agus Martowardojo said that there are two main global challenges that are being faced by Southeast Asia’s largest economy and which can impact negatively on the nation’s economy. These challenges are the low global oil prices (which have fallen below USD $50 per barrel) and the monetary policy normalization of the US Federal Reserve amid the structural economic recovery of the USA. This policy involves higher US interest rates (expected in the second half of 2015) and a bullish US dollar.

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The Indonesian rupiah exchange rate appreciated against the US dollar on Thursday (08/01) amid mostly strengthening Asian equity and currency markets as a number of positive market sentiments arose (specifically the release of the Federal Reserve’s December minutes). According to the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.48 percent to IDR 12,674 per US dollar. Meanwhile, Indonesia’s benchmark Jakarta Composite (stock) Index was up 0.25 percent (5,221.89 points) at the end of today’s trading day.

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The Indonesian rupiah exchange rate is experiencing a weak start of the New Year. According to the Bloomberg Dollar Index, Indonesia’s currency had depreciated 1.26 percent to IDR 12,543 per US dollar by 13:35 pm local Jakarta time on Friday (02/01). However, this weak performance is in line with the performance of other emerging Asian currencies against the US dollar on today’s trading day (amid an improving US economy), thus extending the depreciating trend that started in the second half of 2014.

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The Standard Chartered Bank expects the economy of Indonesia to accelerate slightly in 2015 compared to this year’s estimated performance. The bank forecasts a growth pace of 5.2 percent year-on-year (y/y) next year, up from 5.1 percent (y/y) in 2014. Standard Chartered Bank economist Eric Sugandi recently said that the Indonesian economy will be affected by two factors: the great rotation (capital outflows from emerging markets ahead of US interest rate hikes) and growth disparity (slowing growth or recession in China and Japan).

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Although many currencies weakened against the US dollar after the US Federal Reserve stated that it is on track to raise its key Fed Fund Rate "somewhere next year" amid structural improvement of the US economy (after having kept the rate near zero for a "considerable time"), Indonesia's rupiah opened strong on Thursday (18/12). Based on the Bloomberg Dollar Index, Indonesia’s currency had appreciated 0.91 percent to IDR 12,553 per US dollar at 9:15 local Jakarta time.

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The Indonesian rupiah exchange rate depreciated to its lowest level since August 1998 (when Indonesia was in the early recovery stage from the Asian Financial Crisis). According to the Bloomberg Dollar Index, the rupiah had depreciated 1.78 percent to IDR 12,689 per US dollar by 12:50 pm local Jakarta time on Monday (15/12). This weak performance is caused by bullish momentum of the US dollar (amid the improving US economy) in combination with local year-end US dollar demand for debt repayments.

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The central bank of Indonesia announced that the country’s foreign exchange reserves declined USD $900 million to USD $111.1 billion at the end of November 2014. The decline was primarily due to government debt repayments and the central bank’s use of foreign exchange to engage in monetary management. Meanwhile, the Indonesian rupiah exchange rate - which had touched six year lows in recent days - appreciated 0.08 percent to IDR 12,299 per US dollar on Friday (05/12) based on the Bloomberg Dollar Index.

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The central bank of Indonesia is expected to keep its key interest rate (BI rate) at 7.50 percent at the next Board of Governors’ meeting (scheduled for Thursday 13 November 2014) in anticipation of accelerated inflation triggered by higher prices of subsidized fuels. The Indonesian government plans to raise prices of subsidized gasoline and diesel before the end of the month in an attempt to curb the country’s wide current account deficit and reallocate government funds to more structural or productive activities than fuel consumption.

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Economic growth in Indonesia is expected to continue to slow in the third quarter of 2014 according to the country’s central bank. Bank Indonesia Deputy Governor Perry Warjiyo said on Thursday (30/10) that the institution believes gross domestic product (GDP) growth of Southeast Asia’s largest economy to reach 5.1 percent year-on-year (y/y) in Q3-2014, similar to the GDP growth result in the previous quarter (5.12 percent, y/y). Main reason for this slowing pace is the sluggish global economy and particularly the case of China.

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For most of this year, the financial media has held a generally positive tone. There have been some exceptions in cases like the Eurozone which is still mired in a deeply divided sovereign debt crisis. But for most of the world, 2015 has been a positive period in terms of general growth in their broad trends. So it might be easy for macro investors to assume that most markets are currently establishing themselves in the bullish direction.

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For most of this year, the Indonesian rupiah has met selling pressure against the US Dollar. Year-to-date price activity in the USD/IDR shows a rise from below IDR 12,250 to new highs above IDR 13,330 per US dollar. For Indonesian export companies, this is great news as it means that their products will be cheaper for foreign consumers to buy. For the domestic economy, this creates a different set of implications as it also makes it less likely that foreign investors will be looking to buy into Indonesian assets.

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Kalau kita memperhatikan aktivitas jangka panjang rupiah, kita telah melihat kekuatan yang mengejutkan dalam aktivitas beberapa bulan terakhir. Hal ini mengejutkan karena beberapa alasan yang berbeda dan tidak serupa dengan keadaan pasar negara berkembang lain di Asia. Secara esensial ini menyarankan bahwa aktivitas perekonomian di wilayah ini telah agak kurang berhubungan dan bahwa trend yang tampak di satu negara tidak bisa diprediksi sama di negara lain. Namun ketika kita melihat grafik aktivitas di rupiah sendiri, kita bisa melihat trend secara umum telah mulai berubah di dua bulan terakhir.

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Most stock markets and currencies in Southeast Asia weakened on Friday (29/05), including Indonesia’s benchmark Jakarta Composite Index and the rupiah. The Jakarta Composite Index fell 0.40 percent to 5,216.38 points, while the rupiah depreciated 0.01 percent to IDR 13,224 per US dollar according to the Bloomberg Dollar Index. Over the past week, Indonesian stocks and the rupiah weakened primarily due to the Greek debt crisis, looming higher US interest rates and the lack of positive domestic factors.

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Para investor jelas sedang menunggu hasil-hasil dari Pertemuan Dewan Gubernur Bank Indonesia yang diadakan pada hari ini (19/05). Dalam pertemuan kebijakan ini, bank sentral Indonesia akan memutuskan pendekatan moneternya. Bagi banyak pelaku pasar, merupakan hal yang penting dan krusial untuk mempelajari apakah Bank Indonesia akan menyesuaikan kebijakan suku bunganya dalam rangka mendukung pertumbuhan ekonomi Indonesia (yang telah mencapai kecepatan terlambat dalam lima tahun terakhir di kuartal 1 tahun 2015).

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Selama setahun terakhir, rupiah telah menguat terhadap berbagai jenis mata uang asing. Namun penguatan ini tidak berlaku terhadap dollar Amerika Serikat (AS). Pada periode waktu yang sama, rupiah menguat terhadap mata uang asing lainnya dan sebaliknya rupiah melemah terhadap dollar AS. Untuk banyak investor yang berfokus pada pasar mata uang, mungkin tampaknya seakan dua mata uang ini hanya sedikit berhubungan. Namun, kalau kita melihat trend yang berkembang selama setahun terakhir, menjadi jelas bahwa keadaannya tidak seperti itu.

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Indonesia’s central bank (Bank Indonesia) decided to maintain its benchmark interest rate (BI rate) at 7.50 percent, the deposit facility rate at 5.50 percent and lending facility rate at 8.00 percent. This interest rate environment is considered to be in line with the central bank’s ongoing efforts to push the country’s inflation figure within its target of 4±1 percent for 2015 and 2016, as well as to control the country’s current account deficit towards a healthier level at 2.5-3 percent of gross domestic product (GDP) in the medium term.

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Menurut data terakhir dari Badan Pusat Statistik (BPS), Indonesia mencatat inflasi bulanan sebesar 0,17% pada bulan Maret 2015. Ini adalah bulan pertama tahun ini Indonesia mencatat inflasi bulanan. Pada bulan Januari dan Februari, Indonesia mengalami deflasi masing-masing 0,24% dan 0,36% pada basis month-to-month (m/m). Inflasi Maret terutama disebabkan karena penyesuaian harga yang diatur: harga yang lebih tinggi dari bensin (oktan rendah), diesel, dan tabung gas elpiji 12 kg. Penyesuaian-penyesuaian ini dibutuhkan karena kenaikan harga minyak dan pelemahan rupiah.

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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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