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19 June 2025 (closed)
Jakarta Composite Index (6,968.64) -139.15 -1.96%
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Latest Reports Trade War
In the month of December 2018 the Indonesian rupiah weakened 0.99 percent from IDR 14,339 per US dollar on the last trading day of November 2018 to IDR 14,481 per US dollar on the last trading day of December 2018 (based on Bank Indonesia’s benchmark JISDOR rate).
Those who invest in Indonesian assets (or actually in any assets across the globe) will need to carefully monitor two matters this week. First, the upcoming Federal Reserve policy meeting (scheduled for 25-26 September 2018) that will most likely result in another interest rate hike. And secondly, the latest developments in USA-China (trade) relations.
The Indonesian rupiah rate depreciated beyond the IDR 14,700 per US dollar level on Friday (31/08). Based on the Bloomberg Dollar Index the rupiah had weakened 0.20 percent to IDR 14,710 per US dollar by 11:00 am local Jakarta time. Indonesia's currency is now gradually approaching a two-decade low. The weakening rupiah also caused the country's benchmark Jakarta Composite Index to fall 1.19 percent on Friday's first trading session.
The Indonesian rupiah is under pressure again on Thursday (23/08) in line with the overall trend of emerging market currencies. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.38 percent to IDR 14,630 per US dollar by 11:00 am local Jakarta time on Thursday.
Most stocks in the Southeast Asian region were in green territory on Monday (20/08). So was Indonesia's benchmark Jakarta Composite Index. The index rose a whopping 1.87 percent to close at 5,892.19 points at the first trading day of the new week, pairing some of the losses it has suffered in recent weeks.
Earlier this week US President Donald Trump announced plans to impose 10 percent import tariffs on USD $200 billion worth of Chinese export products by 30 August 2018, thus further escalating the trade war between the USA and China. While earlier US tariffs focused mostly on industrial goods, the new list of proposed import tariffs includes various commodities (metals, energy and agriculture) as well as consumer products. As a result most commodity prices were in red territory on Wednesday (11/07).
The central bank of Indonesia (Bank Indonesia) hiked its benchmark interest rate three times over the past six weeks - by a total of 1.00 percent to take the benchmark to the level of 5.25 percent - in order to defend the rupiah. Last Friday (27/06) Bank Indonesia surprised part of the market by implementing a 0.50 percent rate hike. As a result, the rupiah strengthened markedly. However, its impact on the rupiah performance seems very temporary. This week the rupiah is again depreciating, hovering around the IDR 14,400 per US dollar level.
Asian stocks and emerging market currencies continue to be under pressure on Thursday morning (28/06) amid uncertainty regarding US authorities' stance on Chinese investment in US tech companies, ongoing concerns over the impact of simmering global trade woes on economic growth, and rising crude oil prices. However, as we approach the lunch break there are some signs of a rebound in Asian markets.
After a (revised) USD $1.63 billion trade deficit in April 2018, Indonesia posted another big trade deficit in the following month. In May 2018 Indonesia's trade deficit reached USD $1.52 billion, slightly lower from the deficit in the preceding month but still constituting a wider deficit than had been expected by analysts. Despite rising exports in May, a soaring crude oil price managed to put big pressures on Indonesia's trade balance.
While most Asian stocks (as well as US and European stock futures) are in green territory on Monday (21/05) on the back of easing concerns about a potential global trade war (led by the US and China), Indonesian assets remain under pressure. Over the weekend, US Treasury Secretary Steven Mnuchin said the US-China trade war is "on hold" following both sides' agreement to suspend any tariff threats for now. This has a positive impact on global markets.
Latest Columns Trade War
There are doubts whether Indonesia's gross domestic product (GDP) growth can reach 5.2 percent year-on-year (y/y) in full-year 2018 as Indonesia is experiencing a couple of major challenges. Challenges include the global trade war, the fragile rupiah, Bank Indonesia's higher benchmark interest rate, the current account deficit, and political tensions ahead of the 2019 legislative and presidential elections. Currently, Indonesia Investments' forecast for Indonesia's economic growth is set at 5.2 percent (y/y) in 2018.
The big news story today is that US tariffs on USD $34 billion worth of Chinese goods came into effect this morning (06/07). Considering China immediately imposed retaliatory tariffs on US imports, it means we are witnessing the start of the global trade war. There have been major concerns over simmering trade tensions ever since US President Donald Trump announced steep steel and aluminum tariffs back in late-February 2018. Now, however, the trade war has really arrived.
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