Stocks & Rupiah Update Indonesia: Impact of Janet Yellen’s Statements
Whereas the Indonesian rupiah is depreciating on Monday’s trading day (30/03), Indonesian stocks climb significantly. At 14:15 pm local Jakarta time, the benchmark stock index (Jakarta Composite Index) had gained 0.93 percent to 5,444.27 points. In line with other Asian markets, Indonesia’s stock index felt the positive impact of Fed Chief Janet Yellen’s statements on Friday (27/03). Yellen indicated in a speech in San Francisco that it is riskier to raise US interest rates too fast than to raise them too slowly.
For investors this was a signal that the US central bank will not raise rates too soon although Yellen also emphasized that the key US interest rate hike could occur sometime in 2015. As a result, emerging market assets, including Indonesian stocks, are considered attractive today. Meanwhile, Indonesian companies’ corporate earnings reports covering 2014 generally show a positive trend.
It was also reported that inflows from end-quarter portfolios boosted stock indices in the Southeast Asian region, causing the Philippine index to hit a record high, while oversold Thai stocks rebounded.
The rupiah’s performance is less impressive than the performance of Indonesian stocks. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.17 percent to IDR 13,087 per US dollar at 14:15 local Jakarta time. Market participants seem to be waiting for the next macroeconomic data of Indonesia to be released by Statistics Indonesia at the start of April. Indonesian inflation is forecast to have remained stable in March (from 6.29 percent year-on-year in February 2015) while the country’s is projected to record a small trade surplus in February.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.16 percent to IDR 13,086 per US dollar on Monday (30/03).
Indonesian Rupiah versus US Dollar (JISDOR):| Source: Bank Indonesia