Subscriber Update - Impact Fed Tapering on Indonesia's Financial Markets
Update COVID-19 in Indonesia: 4,223,094 confirmed infections, 142,413 deaths (06 October 2021)
17 October 2021 (closed)
Jakarta Composite Index (6,633.34) +7.22 +0.11%
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
Below is a list with tagged columns and company profiles.
Today's Headlines Inflation
As we predicted last month, August 2020 brought mild deflation to Indonesia. Based on the latest data from Badan Pusat Statistik (BPS), the consumer price index posted deflation of 0.05 percent month-on-month (m/m).
The novel coronavirus (COVID-19) pandemic brings unusual times for any country, especially in terms of the economic and social environments. In the case of Indonesia it has triggered historically low headline inflation, namely 1.54 percent year-on-year (y/y) after July 2020 brought deflation of -0.10 percent month-on-month (m/m).
On Wednesday (05/08/2020) Indonesia Investments released the July 2020 edition of its monthly report. In this edition, titled 'A Modest Rebound', we discuss the impact of the COVID-19 crisis on the Indonesian economy, Indonesia's automotive industry, and a range of other topics.
In June 2020 the novel coronavirus (COVID-19) pandemic continued to undermine business activity and consumer demand across Indonesia, hence triggering very low inflation, namely 0.18 percent month-on-month (m/m).
Indonesia’s inflation rate was unusually mild in May 2020. According to the latest data from Statistics Indonesia (BPS), the country’s consumer price index (CPI) stood at 0.07 percent month-on-month (m/m) only.
As expected, Indonesia’s inflation rate was quite low in April 2020. According to the latest data from Statistics Indonesia (BPS), the consumer price index (CPI) stood at 0.08 percent month-on-month (m/m) in April.
Indonesia posted inflation of 0.10 percent month-on-month (m/m) in March 2020, almost unchanged from a pace of 0.11 percent (m/m) in the same month one year earlier. Hence, Indonesia’s consumer price index (abbreviated: CPI) increased 2.96 percent year-on-year (y/y) in March 2020 (from 2.97 percent in the preceding month).
Indonesia’s February 2020 inflation accelerated slightly more than analysts had expected. The consumer price index (CPI) increased 2.98 percent year-on-year (y/y), up from 2.68 percent (y/y) in the preceding month.
In the first month of 2020, Indonesian inflation was slightly lower than we had expected. Indonesia inflation was recorded at 0.39 percent month-on-month (m/m) in January 2020.
Indonesian inflation was kept at a very mild rate of 0.34 percent month-on-month (m/m) in December 2019. This is remarkably low inflation considering the last month of the year usually triggers a significant increase in demand for consumer goods in the context of the Christmas and New Year celebrations. It is also a period when many Indonesians opt for a holiday.
Latest Columns Inflation
Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.
Indonesia’s central bank (Bank Indonesia) decided to maintain its benchmark interest rate (BI rate) at 7.50 percent, the deposit facility rate at 5.50 percent and lending facility rate at 8.00 percent. This interest rate environment is considered to be in line with the central bank’s ongoing efforts to push the country’s inflation figure within its target of 4±1 percent for 2015 and 2016, as well as to control the country’s current account deficit towards a healthier level at 2.5-3 percent of gross domestic product (GDP) in the medium term.
According to the latest data from Statistics Indonesia (BPS), Indonesia recorded monthly inflation of 0.17 percent in March 2015. It was the first month this year in which Indonesia recorded inflation. In January and February Indonesia experienced deflation of 0.24 percent (m/m) and 0.36 (m/m), respectively. March inflation was primarily the result of administered price adjustments: higher prices of (low-octane) gasoline, diesel and 12-kg LPG canisters. These adjustments were necessary amid rising oil prices and rupiah depreciation.
Indonesia’s central bank (Bank Indonesia) decided to hold the country’s key interest rate (BI rate) at 7.50 percent, the deposit facility rate at 5.50 percent, and the lending facility rate at 8.00 percent at the Board of Governor’s Meeting conducted on Tuesday 17 March 2015. Bank Indonesia said that its decision is in line with its ongoing efforts to push inflation back to the target range of 4±1 percent for both 2015 and 2016, and to guide the country’s current account deficit towards a healthier level at 2.5-3 percent of GDP in the medium term.
Indonesia’s consumer price index fell for the second consecutive month in February 2015, recording deflation of 0.36 percent month-on-month (m/m) in February, while on an annual basis Indonesian inflation eased to 6.29 percent (y/y), down from 6.96 percent (y/y) in the preceding month. Inflationary pressures declined primarily on the back of lower prices of chili peppers and fuel. Easing inflation in Southeast Asia’s largest economy may provide room for Indonesia’s central bank (Bank Indonesia) to cut interest rates further this year.
The Indonesian rupiah exchange rate continued to depreciate on Monday (02/03). According to the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.30 percent to IDR 12,970 per US dollar, a six-year low. Apart from general bullish US dollar momentum in recent months (amid monetary tightening in the USA), the rupiah weakened due to Bank Indonesia’s signals that it tolerates a weaker currency in a move to boost exports (limiting the country’s current account deficit), and due to China’s interest rates cut.
In a surprise move, the central bank of Indonesia (Bank Indonesia) decided to lower its key interest rate (BI rate) by 25 basis points to 7.50 percent at the Board of Governor’s Meeting on Tuesday (17/02). The deposit facility rate (Fasbi) was also lowered by 25 basis points (to 5.50 percent), while the lending facility rate remained steady at 8.00 percent. In a press release the central bank stated that the current policy direction is estimated to moderate the country’s wide current account deficit further, while inflation remains under control.
The Indonesian rupiah exchange rate appreciated and Indonesian stocks rose on Wednesday (04/02) on the back of rallying oil prices, a successful bond auction, easing tensions in Europe, and weak US factory orders. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.21 percent to IDR 12,630 per US dollar on Wednesday (04/03). Meanwhile, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) climbed 0.45 percent to 5,315.28 points.
The trade balance of Indonesia improved in 2014. Over the whole year of 2014 Indonesia posted a USD $1.88 billion trade deficit, significantly better than the USD $4.08 billion deficit it recorded a year earlier. Today (02/02), Statistics Indonesia announced that Indonesia posted a USD $0.19 billion trade surplus in the last month of the year after having recorded a USD $0.42 billion trade deficit in the preceding month. The improved performance is mainly due to the country’s growing non-oil & gas surplus and narrowing oil & gas deficit.
In line with the performance of other Asian emerging currencies, Indonesia's rupiah exchange rate appreciated on Monday (12/01) as the fall in US wages (released late last week) caused speculation that the Federal Reserve will - for now - delay its plan to start raising US borrowing costs. Despite solid growing US non-farm payrolls in December 2014, US wages (average hourly earnings) fell the most in eight years. Indonesia’s rupiah appreciated 0.38 percent to IDR 12,599 per US dollar according to the Bloomberg Dollar Index.
