Indonesian Stocks Down Ahead of Fed Meeting; Rupiah Strengthens
Most Asian stock indices were in red territory on Tuesday (27/10) ahead of the Federal Reserve's two-day policy meeting (scheduled to start today) and following the sluggish performance of US and European stocks on Monday. Investors seem to engage in profit-taking after global equity markets hit a two-month high on China's interest rates cut, the European Central Bank (ECB)'s plan to add stimulus to boost inflation, and expectation of more stimulus from Japan's central bank as well as a delay in higher US interest rates.
The Federal Reserve will release a statement on Wednesday after its two-day policy meeting has finished. Most analysts and investors expect the US central bank to maintain its key Fed Fund Rate in the range of 0.00-0.25 percent (the level it has been since 2008).
The central bank of Japan will release a statement on Friday. After China's interest rates cut last week and the ECB's plan to add stimulus, investors expected that Japan's central bank would add also stimulus to its - already massive - stimulus program. However, after comments made by an economic adviser of Prime Minister Shinzo Abe (hinting that more stimulus is not necessary), these expectations have somewhat cooled.
Indonesia's benchmark Jakarta Composite Index fell 0.38 percent to 4,674.06 points on Tuesday.
Jakarta Composite Index (IHSG):
The US dollar somewhat weakened on Tuesday (27/10) as the US Commerce Department announced that new US single-family home sales fell to near a one-year low in September after two consecutive months of gains.
Based on the Bloomberg Dollar Index, the Indonesian rupiah appreciated 0.18 percent to IDR 13,623 per US dollar. Meanwhile, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.12 percent to IDR 13,626 per US dollar on Tuesday (27/10).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia