10 October 2025 (closed)
Jakarta Composite Index (8,257.86) +6.92 +0.08%
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The US dollar is advancing on Thursday (28/09) amid strong US dollar demand on the back of US President Donald Trump's tax reform program announcement and looming further monetary tightening by the Federal Reserve before the year-end. Rising US treasury yields naturally cause US dollar strength, hence leading to weakening emerging market currencies, with especially the Indonesian rupiah being affected significantly today.
Investors are again in search of safe haven assets on Wednesday (27/09), hence most emerging market currencies, including Indonesia's rupiah exchange rate, are weakening against the US dollar. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.28 percent to IDR 13,412 per US dollar by 14:45 am local Jakarta time. Yesterday, the rupiah had already weakened 0.37 percent against the greenback.
Indonesia's central bank (Bank Indonesia) said the nation's foreign exchange reserves rose to USD $128.8 billion at the end of August 2017, higher than the USD $127.8 billion one month earlier. This growth was primarily attributed to foreign exchange receipts from tax revenues and government oil & gas export proceeds, as well as auctions of Bank Indonesia's foreign exchange bills.
Based on the Bloomberg Dollar Index, the Indonesian rupiah had appreciated 0.65 percent to IDR 13,221 per US dollar by 10:30 am local Jakarta time on Friday morning (08/09), extending Thursday's gains when the rupiah strengthened 0.20 percent against the greenback. What explains this strong rupiah performance?
The central bank of Indonesia (Bank Indonesia) is convinced that geopolitical troubles on the Korean peninsula will not impact negatively on the Indonesian rupiah exchange rate. Bank Indonesia Agus Martowardojo said he sees little impact (yet) but emphasized that the lender of last resort will continue to carefully monitor persistent tensions that have heightened after North Korea's latest nuclear test - its biggest-ever - on Sunday (03/09).
On Wednesday (06/09) Asian stocks are following the example of Wall Street's slide overnight. The benchmark MSCI Asia was down 0.66 percent by 10:15 am local Jakarta time on Wednesday morning. This weak performance is attributed to persistent concerns about North Korea's provocative behavior, while any non-violent sanctions against North Korea will unlikely encourage the nation to stop its nuclear program.
Asian stocks are in red territory on Monday (04/09), as expected, amid heightened concerns about North Korea's nuclear program. Over the weekend the nation conducted its sixth - and most powerful - nuclear test. Even more alarming, North Korea claims it has developed a hydrogen bomb; a bomb that is more powerful than the atomic bombs that were dropped on Japan's Hiroshima and Nagasaki by the United States in World War II.
The Indonesian government proposed the rupiah value at IDR 13,500 per US dollar in the 2018 State Budget (that still requires approval from the House of Representatives). This implies the government expects the rupiah to depreciate modestly in the period ahead. Currently, the rupiah is trading at IDR 13,356 per US dollar (21/08). In the Revised 2017 State Budget the rupiah value target was set at IDR 13,400 per US dollar.
In local Indonesian media it is reported that Indonesian President Joko Widodo has given his blessing to the central bank (Bank Indonesia)'s plan to redenominate the rupiah. Bank Indonesia has already prepared a draft bill on the redenomination of the Indonesian Rupiah with the aim to improve economic efficiency and to create smoother commercial transactions. While the rupiah value would remain unchanged, the draft bill eyes to remove the last three zeros on all rupiah bills and coins.
Indonesia's benchmark Jakarta Composite Index is expected to be under pressure on Monday (24/07) as markets await the release of corporate earnings reports (for example Amazon.com Inc, GlaxoSmithKline Plc and Credit Suisse Group AG will release their earnings this week) as well as the Federal Reserve meeting on Wednesday (26/07). The Fed is expected to keep its monetary policy unchanged but investors will be looking for clues about the timing of the unwinding of the balance sheet.
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The Indonesian rupiah exchange rate continued to depreciate further on Wednesday (04/06). According to the Bloomberg Dollar Index, the currency of Indonesia had weakened 0.38 percent to IDR 11,855 per US dollar by 15:00pm local Jakarta time. The depreciation occurred due to US dollar demand from local importers for payments and renewed concern about the country's trade balance. Today's performance of the rupiah is in line with the performance of other Asian currencies as investors return to the US dollar on higher US yields.
Supported by enthousiastic foreign investors, the benchmark stock index of Indonesia (Jakarta Composite Index or also known as IHSG) managed to climb 0.61 percent to 4,942.16 points on Tuesday (03/06). Particularly consumer, trade and mining stocks were popular on today's trading day. It is interesting to note that this growth happened amid sharp rupiah depreciation as the currency still feels the negative impact of the USD $1.97 billion April 2014 trade deficit that was released yesterday (02/06).
Although initially the benchmark stock index of Indonesia (known as Jakarta Composite index or IHSG) fell after the market responded to today's release of Indonesia's April trade deficit and May inflation, the index ended in the green zone due to foreign net buying and general positive Asian indices (influenced by higher stock indices on Wall Street at the end of last week). Particularly Indonesia's big cap stocks in the miscellaneous industry and consumer sectors were popular as these were relatively cheap after having tumbled at the end of last week.
The Indonesian rupiah exchange rate depreciated 0.77 percent to IDR 11,766 per US dollar on Monday (02/06) based on the Bloomberg Dollar Index. From the start of trading the currency of Southeast Asia's largest economy immediately plummeted as market participants anticipated a trade deficit in April 2014. Last Friday, the central bank of Indonesia (Bank Indonesia) announced that it expects Indonesia to post a deficit in April, whereas earlier statements of the central bank had mentioned a slight surplus.
Asian stocks declined on Friday's trading day (30/05) after a government report showed that the US economy - the world's largest economy - shrank by one percent (year-on-year) in the first quarter of 2014, the country's first contraction since early 2011. The contraction was far worse than the initial forecast at 0.1 percent. The main cause of the contraction was the severe winter that hit the USA. The benchmark stock index of Indonesia (Jakarta Composite Index) fell 1.84 percent to 4,893.91 points on Friday (30/05).
Based on Bank Indonesia's benchmark rupiah exchange rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR), the Indonesian rupiah exchange rate depreciated 0.44 percent this week. Although Asian currencies have been largely supported by renewed capital inflows as investors are optimistic that central banks across the globe continue to provide stimulus to boost local economies, the rupiah has been under pressure due to various domestic issues. These issues include politics as well as fuel subsidies.
The Indonesian rupiah exchange rate continued its recent depreciating trend on Wednesday (28/05). According to the Bloomberg Dollar Index, the currency had depreciated 0.46 percent to IDR 11,633 against the US dollar at the end of the trading day. The rupiah's performance is in line with the general trend in Asia where most currencies lost ground to the greenback on today's trading day. As various US economic data indicate a continued recovery of the US economy, the market expects more US monetary tightening.
The Indonesian rupiah exchange rate continued to depreciate further on Monday’s trading day (26/05). Based on the Bloomberg Dollar Index, the currency of Indonesia had depreciated 0.17 percent to IDR 11,595 per US dollar by 1pm local Jakarta time. On Monday morning the US dollar was strengthening against most emerging currencies in Asia. Meanwhile, the central bank's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.63 percent to IDR 11,633 against the US dollar.
On the last trading day of the week, the benchmark stock index of Indonesia (known as the Jakarta Composite Index of IHSG) rose 0.06 percent to the level of 4,973.06 points. Trading volume was low as investors are still carefully monitoring political and economic developments in Indonesia. Earlier in the week, political uncertainty increased when the country's second-largest political party (Golkar) decided to join the coalition that supports the Prabowo Subianto and Hatta Rajasa pair in the July presidential election.
The Indonesian rupiah exchange rate is heading for its biggest weekly decline since the second week of December 2013. According to the Bloomberg Dollar Index, the currency of Southeast Asia's largest economy had depreciated 0.36 percent to IDR 11,572 per US dollar by 2.30pm local Jakarta time on Friday (23/05). However, year to date, the rupiah is still among the best performing Asian emerging currencies against the greenback (+5.19 percent). What are the reasons that explain the rupiah's weak performance this week?
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