10 October 2025 (closed)
Jakarta Composite Index (8,257.86) +6.92 +0.08%
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According to credit rating agency Standard & Poor’s (S&P), Indonesian companies will have difficulty to pay their (growing) overseas debt in case the rupiah will touch IDR 15,000 per US dollar. Particularly as most Indonesian companies have to face declining profit and revenue growth due to curbed domestic demand amid Indonesia’s economic slowdown.
Indonesian stocks and the rupiah started weak on Thursday morning (10/09), the day after the Indonesian government unveiled its first economic policy package. In line with the trend in the whole region this morning, most (emerging market) assets in Asia are declining on weak Chinese and Japanese economic data. These weak data cause heightened concern about sluggish global economic growth.
Indonesian stocks and the rupiah started strong on Wednesday (09/09). Immediately after opening the benchmark Jakarta Composite Index rose over one percent to 4,366 points, while the rupiah appreciated 0.25 percent to IDR 14,244 per US dollar (Bloomberg Dollar Index) as these assets were supported by positive global sentiments after there had occurred a rally in most global equity markets on Tuesday (08/09).
Concern about Indonesia’s financial stability has heightened as the country’s foreign debt (USD $304.3 billion), by far, exceeds the central bank’s foreign exchange reserves which stood at USD $105.3 billion in late August 2015. Meanwhile, the weak rupiah (having depreciated nearly 15 percent against the US dollar so far in 2015) adds significant pressure on Indonesia’s foreign debt position hence causing concern about a looming debt crisis.
Despite the hosting of the Gaikindo Indonesia International Auto Show 2015 (20-30 August 2015), Indonesian car sales continued to shrank in August due to people’s weaker purchasing power amid the country’s economic slowdown. In August a total of 90,077 cars were sold in Southeast Asia’s largest economy, down 6.9 percent from the same month last year, according to the latest data from the Indonesian Automotive Industry Association (Gaikindo).
Indonesia’s foreign exchange reserves fell to USD $105.3 billion in late August 2015 (from USD $107.6 billion in the preceding month) as the government used foreign exchange (forex) for external debt payments while the central bank (Bank Indonesia) used part of the forex to intervene in the currency market in an effort to support the ailing rupiah rate which has been under severe pressure amid looming further monetary tightening in the USA and concern about the hard landing of China’s economy.
Most Asian stock markets finished lower on Monday (07/09) on persistent concern about the hard landing of China’s economy and the (related) selloff on European and US markets that occurred at the end of last week. Meanwhile, most Asian currencies depreciated (against the US dollar) after a US jobs report (released last Friday) could make the Federal Reserve decide to raise short-term interest rates later this month. All in all, investor sentiment remains fragile.
Indonesian stocks and the rupiah had a bad start on Monday morning. By 09.35 am local Jakarta time, Indonesia’s benchmark Jakarta Composite Index had fallen 0.99 percent to 4,371.49 points, while the rupiah had depreciated by 0.45 percent to IDR 14,236 per US dollar (Bloomberg Dollar Index).
Indonesian stocks and the rupiah are slightly down on Friday afternoon (04/09). Similar to yesterday it is a relatively quiet trading today (possibly caused by closed markets in Shanghai hence curtailing the spread of severe volatility). By 15:20 pm local Jakarta time the benchmark Jakarta Composite Index was down 0.48 percent to 4,411.99 points while the Indonesian rupiah had depreciated 0.07 percent to IDR 14,180 per US dollar (based on the Bloomberg Dollar Index).
International credit rating agency Moody’s Investors Service stated that the healthy liquidity levels of Indonesian property developers are expected to be sufficient to offset the negative impact of the heavily depreciated rupiah. A weak rupiah is troublesome - and negative for the credit rating - as about two-thirds of property developers’ debt is US dollar-denominated, while their revenue is rupiah-denominated. Secondly, Moody's is positive about the government recent decision to offer tax holidays.
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Based on the Bloomberg Dollar Index, the Indonesia rupiah exchange rate had depreciated 0.18 percent to IDR 12,113 per US dollar at 14:45 local Jakarta time on Monday (20/01). The most important factor that caused this negative performance was China's slowing economic growth in quarter IV-2013. In the fourth quarter of 2013, China's GDP grew 7.7 percent, down from 7.8 percent in the previous quarter. This slowing growth indicates that China's economic 'recovery' is still fragile (China is among the five most important trade partners of Indonesia).
On Thursday's trading day (16/01), Indonesia's benchmark stock index (Jakarta Composite Index) fell victim to profit taking after two days of sharp gains (although the index did not came close to its gap at 4,393-4,398 points). The index was also pulled down due to the World Bank's pessimistic forecast for growth of Indonesia's economy as well as today's mixed Asian stock indices. Lastly, the continued Indonesia rupiah exchange rate depreciation contributed to negative market sentiments.
Despite our concern that Indonesia's benchmark stock index (IHSG or Jakarta Composite Index) would be susceptible to profit taking after the national holiday on Tuesday (14/01) as the IHSG rose signficantly on Monday (13/01), it continued its rise on Wednesday (15/01). The IHSG was supported by positive Asian indices that were influenced by strong US and European stock markets after the release of positive economic data in the USA and Europe. The depreciating rupiah exchange rate, however, limited the IHSG's gain.
On Wednesday (15/01), Indonesia's rupiah exchange rate depreciated 0.37 percent to IDR 12,095 per US dollar at 14:15 local Jakarta time. Global markets are again in anticipation of the Federal Reserve tapering issue after the Fed officials of Philadelphia and Dallas stated that they support an as-soon-as-possible winding down of the US stimulus program after the release of strong US retail data. The tapering will make it very hard for emerging currencies to gain against the US dollar. At 28-29 January, the Federal Reserve will hold its next meeting.
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 December 2013 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the current account deficit, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:
Today, Bank Indonesia kept its benchmark interest rate (BI rate) at 7.50 percent at the Board of Governors’ meeting. The lending facility rate and deposit facility rate were maintained at 7.50 percent and 5.75 percent respectively. An assessment of the economy in 2013 and outlook for 2014-2015 indicated that such policy is consistent with ongoing efforts to keep inflation within the target of 4.5±1 percent in 2014 and 4±1 percent in 2015, as well as to help reduce the current account deficit to a sustainable level.
Indonesian retail sales surged 14 percent in November 2013 from one year earlier (the highest growth rate since July 2013). On a month-to-month basis, Indonesia's retail sales increased 1.5 percent from October 2013. These findings were the result of a survey conducted by the central bank of Indonesia (Bank Indonesia), which surveyed 650 retailers in 10 Indonesian cities. The bank's survey also indicated that Indonesian retailers may increase prices of their products in 2014 in order to compensate for the depreciating rupiah exchange rate.
As expected, the Jakarta Composite Index (abbreviated IHSG) continued its downward trend amid falling global indices. From the start of Tuesday's trading day (07/01), the IHSG had to face pressures resulting in foreign net selling. Apart from the weakening rupiah exchange rate, negative market sentiments were caused by the Goldman Sachs Group and JP Morgan Chase & Co that both downgraded emerging market economies. This led to a correction on Asian stock markets.
Domestic sales of motorcycles in Indonesia are expected to have fallen by 20 percent to 550,000 in December 2013 compared to the previous month (688,527). According to the Chairman of the commercial department of the Indonesian Motorcycle Industry Association (AISI), Sigit Kumala, this decline is not the result of slowing demand for motorcycles but due to the limited amount of working days amid the Christmas and New Year holidays. This then led to less production and distribution of motorcycles to Indonesian dealers.
From the start of today's trading day (06/01), the Indonesian rupiah exchange rate depreciated against the US dollar. Based on the Bloomberg Dollar Index, Indonesia's currency fell 0.48 percent to IDR 12,238 per US dollar at 13:00 local Jakarta time. This declining trend is in line with the majority of other Asian Pacific currencies. With the exception of the Australian dollar and the Japanese yen, the US dollar appreciated against all Asia Pacific currencies in the morning of Monday (06/01).
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