Just before the market closed on Tuesday (18/08) the Indonesian rupiah experienced a remarkable recovery, signalling that the country’s central bank (Bank Indonesia) intervened to support the ailing currency (after Malaysia’s ringgit, the rupiah is the second-worst performing emerging currency in Asia so far this year, weakening 11.2 percent against the US dollar). Today, based on the Bloomberg Dollar Index, the Indonesian rupiah was gradually falling toward IDR 13,860 per US dollar until it suddenly appreciated markedly.

Read more ›

For the sixth straight month, the central bank of Indonesia (Bank Indonesia) left its interest rate regime unchanged at Tuesday’s Board of Governor’s meeting (18/08) as it aims to guard the rupiah against severe volatility (which occurred after China’s yuan was allowed to devalue, while markets are still preparing for monetary tightening in the USA) and tries to combat inflation.

Read more ›

Although influence of the devaluation of China’s yuan has eased, the Indonesian rupiah remains under pressure as investors are waiting for results of Bank Indonesia’s Board of Governor’s meeting (to be held later today), low oil (and other commodity) prices, while the US dollar appreciates against most other currencies amid mixed US macroeconomic data. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.12 percent to IDR 13,838 per US dollar by 10:30 am local Jakarta time on Tuesday (18/08).

Read more ›

On 16 August 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic and political subjects such as the cabinet reshuffle, the 2016 State Budget draft, the current account balance, an analysis of the recent performance of the rupiah and Indonesian stocks, the coal industry, and more.

Read more ›

The central bank of Indonesia (Bank Indonesia) announced on Friday (14/08) that the country’s current account deficit narrowed to USD $4.48 billion, or 2.1 percent of gross domestic product (GDP), in the second quarter of 2015. In the same quarter last year the deficit stood at USD $9.59 billion). As such, the current account deficit (CAD) has become more sustainable and this may provide some support for the rupiah which is currently facing tough times (ahead of a looming US interest rate and China’s yuan devaluation).

Read more ›

Today (14/08) the central bank of China let the yuan appreciate 0.05 percent against the US dollar, effectively ending three consecutive days of devaluation. The People's Bank of China (PBoC) also pledged to safeguard a stable yuan after the sharp devaluation had triggered significant volatility on international financial markets. For example, Indonesian assets (stocks and the rupiah) tumbled severely on Tuesday and Wednesday amid yuan devaluation (and looming higher interest rates in the USA).

Read more ›

For the third straight day China allowed its currency to weaken against the US dollar. On Thursday (13/08) the yuan depreciated 0.7 percent against the greenback, signalling that China’s central bank may let the yuan weaken further in a controlled manner. Yesterday, just before trading closed, it actually intervened to support the currency as the yuan depreciated nearly two percent (the daily limit). The move of China to devalue the yuan is a step toward liberalization and also boosts the country’s sluggish export performance.

Read more ›

The fall of Indonesian stocks and the rupiah on Wednesday (12/08) is much more severe than had previously been expected. By 11:14 am local Jakarta time, the benchmark Jakarta Composite Index had fallen 3.12 percent to 4,478.56 points, while the rupiah had depreciated 1.75 percent to IDR 13,845 per US dollar according to the Bloomberg Dollar Index. Across Asia, emerging markets are badly affected (for a second straight day) by China’s decision to devalue its yuan. The yuan is now at its weakest level since October 2012.

Read more ›

Indonesian stocks are experiencing a remarkable fall on Tuesday (11/08). In the first trading session, the benchmark stock index (Jakarta Composite Index) plunged 2.15 percent to 4,646.95, its lowest level since early March 2014 and leading declines among Southeast Asian stock indices. Stocks in Asia have been hit by China’s decision to allow its currency to weaken against the US dollar (the yuan fell 1.6 percent against the US dollar after the move dragging down other Asian currencies including the Indonesian rupiah).

Read more ›

The Indonesian rupiah continues to depreciate on Tuesday (11/08). By 11:16 am local Jakarta time, the rupiah had depreciated 0.14 percent to IDR 13,570 per US dollar according to the Bloomberg Dollar Index. Indonesia’s currency has been touching 17-year lows due to bullish US dollar momentum ahead of looming higher US interest rates. Today, the US dollar received additional strength as China allowed its currency to weaken to a three-year low, dragging down other currencies in the Asian region.

Read more ›

On Friday (03/01), the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) ended 1.61 percent down to 4,257.66 points amid a majority of global indices declining after having experienced a short (window dressing-inspired) rally at the end of the year. The IHSG, which was not affected by the window dressing phenomenon, was dragged down after experiencing a four-day rally in the last week of 2013. Positive US employment data were unable to support global indices.

Read more ›

Garuda Indonesia, the country's top-class airline, is planning to conduct a rights issue in the first quarter of 2014. Through this corporate action, which has already been approved by the shareholders, the state-controlled company aims to raise IDR 2 trillion (USD $162.6 million). For 2014, the airline plans to allocate IDR 4 trillion in capital expenditure (capex) for business expansion. About half of this amount should originate from funds generated through the rights issue.

Read more ›

As we approach the end of 2013 it is worth taking a look back to the performance of the stock market of Indonesia this year. At the start of the year, investors and analysts were positive that the country's benchmark stock index (known as the IHSG or Jakarta Composite Index) would post steady growth. Initial forecasts claimed that the IHSG could surpass the 5,000 points level by the end of 2013 from 4,300 at end-2012. The actual performance of the IHSG in fact exceeded expectations as in May 2013 the index moved beyond 5,200 points.

Read more ›

On Wednesday (18/12), the Federal Reserve announced to slightly scale back its quantitative easing program starting from January 2014. The reduction of the bond-buying program involves USD $5 billion of mortgage-backed securities and USD $5 billion of US treasury securities. Thus, the Federal Reserve will purchase a total of USD $75 billion worth of bonds per month instead of the current pace of USD $85 billion. For the moment, this policy change has an euphoric effect on global stock markets.

Read more ›

The announcement that the Federal Reserve (FED) will start its quantitative easing tapering in January 2014, while keeping interest rates low, made stock indices in Asia rise, including Indonesia's benchmark stock index (IHSG), although mining and property stocks were able to limit today's gain. The IHSG rose 0.85 percent to 4,231.98 points on Thursday (19/12). The Indonesia rupiah exchange rate (IDR), however, was down as future tighter US dollar supplies causes market participants to buy US dollar now.

Read more ›

The Indonesia rupiah exchange rate continued its downward trend on Wednesday (18/12). Both Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) and Bloomberg Dollar Index indicated a depreciating rupiah against the US dollar. Bank Indonesia's JISDOR was set at IDR 12,151 per US dollar, a 0.39 percent fall from yesterday (17/12), while in the Bloomberg Dollar Index the currency depreciated 0.35 percent to IDR 12,168 per US dollar at 16:55 in the afternoon, local Jakarta time.

Read more ›

Wall Street, which was up on Monday (16/12) supported by various economic data, managed to support Asian stock indices on Tuesday (17/12), including Indonesia’s benchmark stock index (IHSG). Investors were back and ready to trade on the Indonesia Stock Exchange. As usual, the big cap stocks were highly popular. The rupiah’s Bank Indonesia mid-rate, which improved slightly, also contributed to the good performance of the IHSG today. The index rose 1.37 percent to 4,182.35 points.

Read more ›

Ahead of the Federal Open Market Committee (FOMC) meeting on 17-18 December 2013, the Indonesia rupiah exchange rate is continuing its depreciating trend as the economies of the USA and Japan, particularly the capital markets, are improving and causes the US dollar and Yen to appreciate against other currencies. Both currencies are considered safe havens amid the current volatile world economy. One of the victims is the rupiah, which fell to IDR 12,126 per US dollar at 12.30 local Jakarta time (Bloomberg Dollar Index).

Read more ›

The central bank of Indonesia (Bank Indonesia) estimates that Indonesia's current account deficit will ease to 3.5 percent of the country's gross domestic product (GDP) by the end of 2013. Indonesia's wide current account deficit has been one of the major financial troubles this year and managed to weaken investors' confidence in Southeast Asia's largest economy. Thus, Indonesia became one of the hardest hit emerging countries after the Federal Reserve started to speculate about an ending to its quantitative easing program.

Read more ›

In Bank Indonesia's board of governors' meeting, which was held on Thursday (12/12), it was decided to maintain the country's benchmark interest rate (BI rate) at 7.50 percent. This decision was in line with market expectation but was unable to support the Jakarta Composite Index and rupiah exchange rate. The lending facility and deposit facility interest rates were also maintained at 7.50 percent and 5.75 percent respectively. Bank Indonesia decided not to change the rate as Indonesia's inflation outlook for 2014 is still within target.

Read more ›