The Indonesian rupiah is again flirting with the IDR 13,900 per US dollar level after the central bank announced on Monday (07/12) that Indonesia's foreign exchange reserves fell further in November. Based on the Bloomberg Dollar Index, the rupiah had depreciated by 0.19 percent to IDR 13,887 per US dollar at 15:30 pm local Jakarta time on Tuesday (08/12). Other factors that put pressure on the rupiah are the low oil price (giving rise to a strong US dollar), weak trade data from China, and the looming US interest rate hike.
On 15-16 December, the US Federal Reserve will gather to hold a crucial policy meeting. With US macroeconomic data having improved (particularly US labor statistics), markets are now bracing for the first rate hike in nearly ten years. Although the rate hike is expected to be small, while markets appear to have already factored in the rate hike, the rupiah will remain volatile as long as uncertainty about the timing of the hike persists.
Still few positive news stories come from China, the largest trading partner of Indonesia. Today it was announced by Chinese authorities that the country's exports fell 6.8 percent (y/y) - more than expected - to USD $197.2 billion in November, while imports declined by 8.7 percent (y/y) to USD $143.1 billion. Imports fell for the 13th straight month, but narrowing significantly from an 18.8 percent slump in the preceding month.
Meanwhile, global oil prices are touching six-year lows after the OPEC announced late last week that the organization will continue pumping at near record levels, exacerbating the global supply glut. The Malaysian ringgit is the most badly-affected Asian currency due to the low oil price.
Yesterday, Bank Indonesia announced that Indonesia's foreign exchange reserves had fallen to USD $100.24 billion at the end of November from USD $100.7 billion at the end of the preceding month. This decline was partly caused by central bank actions to stabilize the rupiah.
Indonesia's Foreign Exchange Reserves 2008-2015:
¹ in billion US dollar
² at end-November 2015
Source: Bank Indonesia
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.12 percent to IDR 13,853 per US dollar on Tuesday (08/12).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia