Asian stock indices surged on Monday morning (05/10) on relief that the Federal Reserve may need to postpone a key Fed Fund Rate hike after the release of weak US jobs data at the end of last week. Indonesia's benchmark Jakarta Composite Index was up 2.40 percent to 4,309.71 points by 10:30 am local Jakarta time. Meanwhile, the rupiah had appreciated 0.59 percent to IDR 14,559 per US dollar by the same time (Bloomberg Dollar Index).

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For the 12th consecutive month Indonesia's manufacturing activity contracted as output and new orders declined. The Nikkei/Markit purchasing managers' index (PMI) fell to 47.4 in September 2015 from 48.4 in the preceding month and below analysts' forecasts (a reading of 50.0 separates contraction from expansion). September's contraction was the second-fastest drop in Indonesia's manufacturing activity since the index was started in early 2012.

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Indonesia experienced deflation, with consumer prices falling by 0.05 percent (month-on-month), in September 2015 on the back of lower food and transportation prices. Examples of lower food prices include chicken meat, eggs, chili peppers, onions and cooking oil. Regarding lower transportation costs it was particularly lower air transport tariffs that contributed to deflation. On an annual basis, Indonesian inflation eased to 6.83 percent in September, down from 7.18 (y/y) in the preceding month, and below analysts' estimates at 7.0 (y/y).

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After the government of Indonesia unveiled the second installment of its economic policy package on Tuesday (29/09), the central bank (Bank Indonesia) followed suit by releasing a rupiah exchange rate stabilization package on Wednesday (30/09). Bank Indonesia’s package has three main pillars: (1) safeguarding rupiah rate stability, (2) strengthening rupiah liquidity management, and (3) strengthening foreign exchange supply and demand management.

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Most Asian stock markets were stronger on Wednesday, led by Japan's Nikkei 225 Index which rose 2.70 percent on expectation of further government stimulus measures. Meanwhile, Indonesia's benchmark Jakarta Composite Index rose 1.09 percent to 4,223.91 points supported by the region's rising stock indices as well as on the back of the second installment of Indonesia's economic policy package. Meanwhile, the rupiah appreciated 0.26 percent to IDR 14,653 per US dollar (Bloomberg Dollar Index).

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Indonesian stocks experienced a remarkable roller coaster ride on Tuesday (29/09). After opening the benchmark Jakarta Composite Index fell more than two percent to a near three-year low. However, the index managed to finish the trading day at 4,178.41 points, a 1.41 percent rise. Meanwhile, Indonesia's rupiah managed to curb losses. Based on the Bloomberg Dollar Index, the rupiah passed beyond the IDR 14,800 per US dollar level several times but at the end of the day it had only weakened 0.11 percent to IDR 14,691 per US dollar.

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In an effort to support the ailing Indonesian rupiah, state-owned energy company Pertamina will cut its foreign exchange purchases on the spot market by around 50 percent. Pertamina together with state utility firm Perusahaan Listrik Negara (PLN) account for about half of Indonesia's daily foreign exchange (forex) transactions as these companies require US dollars for fuel purchases and overseas debt settlements.

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Indonesia's benchmark stock index (Jakarta Composite Index) was down over 2 percent, touching a three-year low, while the rupiah weakened beyond the IDR 14,800 per US dollar level (Bloomberg Dollar Index) around 09:00 am local Jakarta time on Tuesday (29/09) as the global selloff persists. Investors are concerned about the economic conditions of China and the world, low commodity prices, while anticipating a Fed Fund Rate hike.

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Stock indices in Asia were mixed on the first trading day of the week. Indonesia’s benchmark Jakarta Composite Index plunged 2.11 percent to 4,120.50 points (a two-year low), while the rupiah (remarkably) appreciated 0.13 percent to IDR 14,674 per US dollar according to the Bloomberg Dollar Index. Meanwhile, European markets were down after opening on Monday (28/09). What influenced these markets today?

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Indonesia plans to cut taxes for local exporters in a bid to boost the country’s foreign exchange reserves, while supporting the rupiah, as part of its second policy package. Indonesia’s rupiah has depreciated 18.1 percent since the start of 2015 due to looming higher US interest rates, low commodity prices, and China’s yuan devaluation. The government now plans to cut income tax on interest that exporters earn when depositing their export proceeds in local banks. Currently, income tax on bank interest (from deposit accounts) stands at 20 percent.

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Indonesia’s consumer price index fell for the second consecutive month in February 2015, recording deflation of 0.36 percent month-on-month (m/m) in February, while on an annual basis Indonesian inflation eased to 6.29 percent (y/y), down from 6.96 percent (y/y) in the preceding month. Inflationary pressures declined primarily on the back of lower prices of chili peppers and fuel. Easing inflation in Southeast Asia’s largest economy may provide room for Indonesia’s central bank (Bank Indonesia) to cut interest rates further this year.

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The Indonesian rupiah exchange rate continued to depreciate on Monday (02/03). According to the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.30 percent to IDR 12,970 per US dollar, a six-year low. Apart from general bullish US dollar momentum in recent months (amid monetary tightening in the USA), the rupiah weakened due to Bank Indonesia’s signals that it tolerates a weaker currency in a move to boost exports (limiting the country’s current account deficit), and due to China’s interest rates cut.

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The Indonesian rupiah strengthened on Monday (16/02) as the country’s twin current account and trade balances improved, while the US dollar weakened on disappointing US retail sales and on optimism that Greece will remain a member of the Eurozone. Meanwhile, Indonesia's Finance Ministry held a successful auction today in which it sold IDR 12 trillion (USD $942 million) of conventional bonds. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.35 percent to IDR 12,753 per US dollar based on Monday (16/02).

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The Indonesian rupiah exchange rate appreciated and Indonesian stocks rose on Wednesday (04/02) on the back of rallying oil prices, a successful bond auction, easing tensions in Europe, and weak US factory orders. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.21 percent to IDR 12,630 per US dollar on Wednesday (04/03). Meanwhile, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) climbed 0.45 percent to 5,315.28 points.

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Positive macroeconomic data of Indonesia - involving the significantly lower trade deficit in 2014 and easing inflation - had a good impact on the Indonesia rupiah exchange rate on Tuesday (03/02) although prior to closing the currency somewhat slid after Australia's central bank cut its interest rates causing speculation of further policy easing around the Asia Pacific region in a move to support sluggish growth and avert deflation. Most emerging Asian currencies strengthened on Tuesday against the US dollar on stronger risk appetite.

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Both Indonesia’s rupiah exchange rate and stocks strengthened on Tuesday (27/01) as concerns about Greece exiting the Eurozone somewhat eased while the positive market sentiments that were caused by the European Central Bank’s recently unfolded quantitative easing program are still felt. Indonesia’s benchmark stock index (Jakarta Composite Index) gained 0.33 percent to 5,277.15 points, while the rupiah appreciated 0.31 percent to IDR 12,469 per US dollar based on the Bloomberg Dollar Index.

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Indonesian stocks hit a record high on Thursday (22/01). Most emerging Asian stocks and currencies strengthened on increased speculation that the European Central Bank (ECB) is to launch a massive bond-buying program (which was confirmed later on the day after Asian markets had closed), a move aimed at boosting inflation in the Eurozone and which puts pressure on euro-denominated assets. The euro had depreciated 1.67 percent against the US dollar by 11:20 ET on Thursday based on Bloomberg data.

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The Indonesian rupiah exchange rate appreciated 0.76 percent to IDR 12,481 per US dollar on Wednesday (21/01) based on the Bloomberg Dollar Index. The performance of the rupiah was in line with most other emerging Asian currencies as Japan’s yen strengthened (against the US dollar) after Japan’s central bank announced to maintain an accommodative monetary policy in an attempt to boost inflation to two percent (y/y). Furthermore, speculation about quantitative easing in Europe boosted attractiveness of riskier Asian assets.

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The Indonesian rupiah exchange rate depreciated on Wednesday (14/01) as global oil and other commodity prices continued to fall thus casting a negative spell on Indonesia’s currency. The rupiah depreciated 0.11 percent to IDR 12,614 per US dollar according to the Bloomberg Dollar Index. Market participants are concerned about the negative influence of low commodity prices on Indonesia’s export performance. Southeast Asia’s largest economy has had to cope with a wide trade and current account deficit in recent years.

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In line with the performance of other Asian emerging currencies, Indonesia's rupiah exchange rate appreciated on Monday (12/01) as the fall in US wages (released late last week) caused speculation that the Federal Reserve will - for now - delay its plan to start raising US borrowing costs. Despite solid growing US non-farm payrolls in December 2014, US wages (average hourly earnings) fell the most in eight years. Indonesia’s rupiah appreciated 0.38 percent to IDR 12,599 per US dollar according to the Bloomberg Dollar Index.

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