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:

    2008   2009
  2010   2011   2012   2013   2014   2015²
Foreign Exchange
  51.6   66.1   96.2  110.1  112.8    99.4   111.9   100.2

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