The central bank (Bank Indonesia) is expected to maintain its benchmark BI rate at 7.50 percent as markets are still plagued by high volatility, while Indonesia is still facing inflationary pressure (7.26 percent year-on-year in July 2015). Moreover, looming higher US interest rates may trigger capital outflows if the BI rate is too low. Bank Indonesia Governor Agus Martowardojo repeatedly emphasized that the central bank needs to prioritize stabilization over economic growth and therefore chances of an interest rate cut are low.

The Federal Reserve Bank of New York announced on Monday (17/08) that the Empire State manufacturing index fell to -14.9 from +3.9 in the preceding month. The August reading is the lowest level since April 2009 (a reading below zero indicates contraction). Meanwhile, the National Association of Home Builders/Wells Fargo housing market index climbed one point, touching its highest level since November 2005.

Global petroleum prices touched six-year lows on Monday (17/08) after it had been announced that Japan's economy contracted by 1.6 percent (y/y) in the second quarter of 2015 on slowing demand from China and bad weather, while oil producers in the USA added oil drilling rigs for a fourth consecutive week despite a recent rout in prices (and output by the Organization of the Petroleum Exporting Countries/OPEC is running well above worldwide demand).

Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.49 percent to IDR 13,831 per US dollar on Tuesday (18/08).

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia

After Malaysia’s ringgit, the rupiah is the second-worst performing currency in emerging Asia so far in 2015, touching a 17-year low against the greenback.

Meanwhile, Indonesia’s benchmark stock index (Jakarta Composite Index) had fallen 0.92 percent to 4,543.04 by 10:32 am local Jakarta time.