Indonesian Stocks Higher on Greece; Rupiah Weaker on Looming Fed Hike
In line with the global trend, Indonesian stocks extended their gains on Tuesday morning (14/07). Most stock indices (across the globe) continue to move in green territory after debt-ridden Greece and its international creditors agreed - after a 17-hour long emergency meeting - to an austerity package that will keep Greece within the Eurozone. Indonesia’s benchmark Jakarta Composite Index (IHSG) had risen 0.60 percent to 4,923.36 points by 11:45 am local Jakarta time on Tuesday.
As turmoil in the Eurozone may now have eased, attention shifts back to the monetary policy of the US Federal Reserve. Last week Federal Chairwoman Janet Yellen said to expect a US interest rate hike later this year and therefore the US dollar is currently gaining bullish momentum. Markets will be eager to learn various US macroeconomic data, to be released this week, such as industrial output, housing starts, inflation and consumer sentiment. If results are positive, then a September rate hike is possible.
The strong US dollar is reason why Indonesia’s rupiah has been depreciating today. By 12:00 noon local Jakarta time, Indonesia’s currency had depreciated 0.20 percent to IDR 13,324 per US dollar according to the Bloomberg Dollar Index.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.08 percent to IDR 13,320 per US dollar on Tuesday (14/07).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia
Eyes are also still on China. The benchmark Shanghai Composite Index had plunged 30 percent from its mid-June peak on heavy concerns about an asset bubble. However, after China’s government implemented various measures (a police crackdown on short-selling as well as a ban on big shareholders and company executives from selling stocks for a six-month period) confidence in Chinese stocks has been somewhat restored (but trading is still highly volatile in China).
Indonesian banks, bonds and the stock market will be closed from Thursday (16/07) to Tuesday (21/07) due to a public holiday (Idul Fitri).