Asian stocks did not have a good start of the week. Most Asian stocks fell on Monday (25/04) in line with retreating oil prices, concerns that the US Federal Reserve may be hinting at further monetary tightening in its upcoming policy meeting, as well as concerns about China's debt and commodities markets. It all resulted in curbed demand for higher-yielding yet riskier Asian assets. Indonesia's benchmark Jakarta Composite Index fell 0.73 percent to 4,878.86 points, while the Indonesian rupiah depreciated 0.04 percent to IDR 13,199 per US dollar (Bloomberg Dollar Index).

Read more ›

The central bank of Indonesia (Bank Indonesia) kept its key interest rate (BI rate) at 6.75 percent at the April policy meeting. This decision was in line with expectations. During the three policy meetings conducted in the January-March 2016 period Bank Indonesia had already cut its BI rate by a combined 75 basis points as inflation and the current account deficit are under control, while the Indonesian rupiah has been strengthening against the US dollar since the start of 2016. Last week, Bank Indonesia announced it will adopt the seven-day reverse repurchase rate (reverse repo) to replace the existing BI rate as the bank's key monetary tool.

Read more ›

Stock markets in Asia are plagued by the failure to see an 'oil freeze deal' reached at OPEC's oil talks in Doha over the weekend. Saudi Arabia announced it will not curtail its oil production as long as other oil producing countries do not curtail production as well. It specifically wants its geopolitical rival Iran to join the production freeze. However, Iran decided not to join the meeting and ruled out any output cuts after recently rejoining the international oil market (due to the lifting of sanctions). Iran indicated it is not cut any output before its oil production reaches the pre-sanction level.

Read more ›

Stocks in Asia were mostly up on Tuesday (12/04) supported by the weaker Japanese yen (retreating after a seven-day rally again the US dollar) and rising commodity prices (with crude oil touching a 2016 high at USD $43 per barrel after the US dollar weakened). Indonesia's benchmark Jakarta Composite Index rose 0.89 percent to 4,829.57 points, while the rupiah appreciated 0.14 percent to IDR 13,115 per US dollar (Bloomberg Dollar Index). Several analysts claim that the positive performance of Indonesian assets was also due to the government's plan to cut the corporate income tax to 20 percent and raise the non-taxable personal income tax by 50 percent.

Read more ›

Despite last week's rallying oil prices, rising stocks on Wall Street and in Europe, as well as expectation of a more gradual increase in US interest rates, Indonesia's benchmark stock index (Jakarta Composite Index) plunged 1.23 percent on Monday (11/04). Overall, the performance of Asian stock markets was mixed reflected by stock trading in the two big economies of China and Japan. Whereas Japanese stocks fell due to the stronger yen (touching a new 17-month high against the US dollar), Chinese stocks climbed on easing worries about deflationary pressures (after China's March CPI inflation remained flat at 2.3 percent y/y).

Read more ›

Indonesia's plan to  raise people's (annual) non-taxable income by 50 percent to IDR 54 million (approx. USD $4,090) is estimated to add 0.3 percentage point to consumption growth in Indonesia according to Indonesia's Finance Minister Bambang Brodjonegoro. Last week, Brodjonegoro announced this tax incentive with the aim to strengthen Indonesians' purchasing power and encourage household consumption. Household consumption, which accounts for about 56 percent of Indonesia's overall economic growth, has been curtailed in recent years amid slowing economic growth, high inflation and the weak rupiah rate (against the US dollar).

Read more ›

Due to weaker-than-expected revenue in 2016, the government of Indonesia has to cut government spending by IDR 50.6 trillion (approx. USD $3.8 billion) this year. Indonesian Finance Minister Bambang Brodjonegoro informed that the government is currently in the middle of discussing revisions of the 2016 State Budget (APBN 2016). Weaker-than-expected government revenue is primarily the cause of weaker-than-targeted tax revenue. The government will also revise its inflation, average rupiah rate, and average oil price targets. Despite the expected cut

Read more ›

The central bank of Indonesia (Bank Indonesia) announced that the nation's foreign exchange reserves rose to a total of USD $107.5 billion at the end of March 2016, up USD $3 billion from Indonesia's forex assets one month earlier. Growing reserves came on the back of foreign exchange receipts, primarily through the the issuance of government global sukuk (Islamic bonds) and Bank Indonesia's US dollar-denominated bills. These forex receipts outweighed the government's foreign debt obligations.

Read more ›

Most emerging market stocks and currencies strengthened today as markets responded positively to Federal Reserve Chairwoman Janet Yellen's dovish statements overnight. Based on her words, the Federal Reserve is not expected to undertake another US interest rate hike soon as the US economy remains fragile amid sluggish global economic growth. As a result Indonesia's benchmark Jakarta Composite Index climbed 0.74 percent, while the Indonesian rupiah appreciated 1.04 percent to IDR 13,256 per US dollar (Bloomberg Dollar Index).

Read more ›

In line with the performance of most emerging stock markets and currencies, Indonesian stocks and the rupiah were under pressure on Monday (28/03). The Jakarta Composite Index fell 1.11 percent, while the Indonesian rupiah depreciated 0.73 percent to IDR 13,343 per US dollar (Bloomberg Dollar Index). This performance is caused by rising speculation that the US Federal Reserve could hike its key Fed Fund Rate as early as April. Several Fed officials have made hawkish comments, while the upward revised 1.4 percent GDP growth of the US economy in Q4-2015 may show that the US is strong enough to cope with another rate hike.

Read more ›

Investors' appetite for mining and plantation stocks managed to support the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) on Thursday's trading day (22/05). After the recent decline of the IHSG, market participants continued to accumulate stocks that are considered cheap. Furthermore, indices on Wall Street on Wednesday were up and impacted positively on Asian indices on Thursday, thereby providing positive market sentiments for the IHSG.

Read more ›

Although most Asian emerging currencies strengthened on Thursday (22/05) against the US dollar due to the preliminary HSBC Flash China Manufacturing Purchasing Managers' Index (PMI) recovering to 49.7 in May 2014 (from 48.1 one month earlier) and the Federal Reserve Minutes indicating that there will be no US interest rate hike soon, the Indonesian rupiah exchange rate continued to decline. Based on the Bloomberg Dollar Index, the currency had depreciated 0.19 percent to IDR 11,531 per US dollar by 5pm local Jakarta time.

Read more ›

Although initially the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) declined shortly after the opening on Wednesday (21/05), during the remainder of the day it went up. This is a trend which we often detect: after a sharp fall we see a rebound on the following day as investors want to take advantage of 'cheap' stocks. However, the rebound was only limited as investors prefer to wait and see for further market sentiments first. The main positive factor today were rising Asian stock indices.

Read more ›

The sharply depreciated Indonesian rupiah exchange rate in the second half of 2013 in combination with the decline in domestic oil lifting has led to a soaring of fuel subsidy spending in 2014. In the 2014 State Budget (APBN 2014), the ceiling of energy subsidy spending for 3-kg LPG and fuels was set at IDR 210.7 billion (USD $18.3 billion). However, in the 2014 Revised State Budget Draft, the government proposes to raise the subsidy ceiling to IDR 285 trillion (USD $24.8 billion), thus swelling IDR 74.3 trillion from the initial ceiling.

Read more ›

Similar to when the market expects the release of positive companies' corporate earnings reports, the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) gained significantly at the start of today's trading day (19/05) as the market waited for the official declarations of the presidential and vice-presidential candidates that will participate in the presidential election that is scheduled for 9 July 2014. The two pairs that will compete are the Joko Widodo-Jusuf Kalla pair and the Prabowo Subianto-Hatta Rajasa pair.

Read more ›

After a promising start of the day, the rupiah exchange rate and Indonesian stocks lost all of their earlier gains ahead of closing on Monday day (19/05). Around 10:00 local Jakarta time, the rupiah rate appreciated more than 0.60 percent to IDR 11,346 per US dollar on speculation that Jusuf Kalla would be nominated as Joko "Jokowi" Widodo's running mate in the presidential election (9 July 2014), backed by a coalition consisting of the PDI-P, NasDem, PKB and Hanura. After the official declaration, however, the currency lost all of its earlier gains.

Read more ›

The week ended well for both the Indonesian rupiah exchange rate and the benchmark Jakarta Composite Index (IHSG). Based on the Bloomberg Dollar Index, the rupiah appreciated 0.30 percent to IDR 11,413 per US dollar at the end of Friday's trading day (16/05). Meanwhile, the IHSG surged 0.80 percent to finish just above the psychological level of 5,000 points. The good performance was supported by investors' positive response towards the latest political developments in Indonesia.

Read more ›

The government of Indonesia will submit a new draft proposal for the 2014 Revised State Budget (APBN-P 2014) on 20 May 2014. Of the seven basic macroeconomic assumptions in the 2014 State Budget (APBN 2014), three assumptions are proposed to be revised. These involve general economic growth, the Indonesian rupiah exchange rate, and crude oil lifting. The government felt that the assumptions need a revision as results in the first quarter of 2014 have not been up to expectation.

Read more ›

The benchmark stock index of Indonesia - known as the Jakarta Composite Index or IHSG - rose 0.17 percent to 4,921.39 points on Tuesday (13/05), impacted by investors' reaction to positive earnings reports of Indonesian coal miners in the first quarter of 2014. Today, foreign investors recorded net buying of IDR 64 billion (USD $5.6 million) and accounted for 31 percent of trading activity. However, investors remain cautious ahead of the presidential election that is scheduled for 9 July 2014 and wait for more clarity about the (vice) presidential candidates that will compete.

Read more ›

ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the April 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

Read more ›