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).

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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

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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.

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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).

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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.

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Asian stocks were mixed after opening on the first trading day of the new week. Energy stocks are mostly down due to another retreat in global oil prices. Oil prices continued Friday's slide due to ongoing concern over excessive supply after last week's US rig count grew for the first time since December 2015. This implies pressure on "commodity-driven" assets, which includes Indonesian stocks and the rupiah. The Indonesian rupiah had depreciated 0.27 percent to IDR 13,152 per US dollar (Bloomberg Dollar Index), while the benchmark Jakarta Composite Index was down 0.07 percent by 09:15 am local Jakarta time.

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Stock markets in Asia as well as Asian emerging market currencies should perform well today after the US Federal Reserve left rates unchanged at its March policy meeting. Moreover, the central bank of the world's largest economy stated that it expects fewer rate hikes in the coming months (dovish outlook) as economic recovery of the USA is still fragile amid slower global growth and turmoil in world markets linked to low oil price. As a result risk sentiment improved sharply, while the US dollar suffered losses.

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The Indonesian rupiah is extending its strong performance. On Monday morning (14/03), Indonesia's currency has been flirting with the IDR 13,000 per US dollar level. According to the Bloomberg Dollar Index, the rupiah had appreciated 0.48 percent to IDR 13,012 by 09:25 am local Jakarta time. The rupiah is one of the "commodity-sensitive" currencies that are feeling the positive impact of rising crude oil prices. Meanwhile, Indonesia's benchmark Jakarta Composite Index rose 0.52 percent after opening of trade on Monday.

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Indonesia's economic growth in the first quarter of 2016 could reach 5 percent (or more) year-on-year provided that the government manages to optimize spending on infrastructure projects and improve people's purchasing power. Large drops in domestic car and motorcycle sales so far this year show that Indonesia's purchasing power remains bleak. Other indicators - such as cement and retail sales - are also not too strong. Firmanzah, economist at the Paramadina University, said the 0.09 percent (m/m) deflation that occurred in February could be a sign of further weakening purchasing power.

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The Indonesian rupiah is flirting with the IDR 13,000 per US dollar level on Monday (07/03) supported by improving risk appetite of investors. By 13:40 pm local Jakarta time, the currency of Indonesia had appreciated 0.64 percent to IDR 13,047 per US dollar (Bloomberg Dollar Index). The rupiah is now on a 13-day 'winning streak', its longest rally in six years, and is the second-best performing emerging market currency after Brazil's real so far this year. What is behind this good performance, and is it sustainable?

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Current Finance minister Agus Martowardojo is approved by Indonesia's Parliament (DPR) to replace Darmin Nasution as governor of Indonesia's central bank (Bank Indonesia) in May 2013. Martowardojo, who has been active in banking for over two decades and had a successful term as head of state-controlled Bank Mandiri, was finance minister since May 2010 after taking over from Sri Mulyani, who was pressured out of Indonesian politics.

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Not only the upward movement of most Asian stock markets, but also a number of positive company reports (regarding corporate performances of 2012) supported the Indonesia Stock Exchange (IHSG) to reach a new record-high level of 4,928.10 on Wednesday, implying an 1.77% increase compared to the previous trading day. Moreover, American and European stock markets had ended higher on Tuesday due to positive data, thus discarding turmoil related to Cyprus.

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After speculation began to spread that an agreement would be reached between Cyprus and Troika (made up of the European Union, the European Central Bank and the IMF), Asian stock markets went up, including the Indonesia Stock Exchange (IHSG). Despite foreigners' appetite for selling Indonesian assets, the index rose as it was lifted by domestic market participants' appetite for purchasing those stocks that experienced a fall on the previous trading day.

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The rise of the Indonesia Stock Exchange (IHSG) at the start of today's session was not sustained. It disappointed market participants who were hoping that Indonesia's main index would continue its upward movement supported by strengthening American and European stock indices after it became known that Cyprus will stay in the Euro-zone and the Federal Reserve will continue its bond-buying program.

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We had hoped for a continuation of the Indonesia Stock Exchange (IHSG)'s rebound after forming a green candle. It failed, however, due to negative market sentiments brought on by the bailout of Cyprus. Also, selling pressures on American stock markets late last week blocked a potential longer rally. The IHSG felt the impact of the Dow Jones Industrial Average (DJIA) that fell after a weaker NY Empire State Manufacturing Index as well as Consumer Sentiment.

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The Indonesia Stock Exchange (IHSG) rebounded after receiving support from positive American stock markets due to a fall in US jobless claims. American stock markets also influenced most other Asian stock markets in a positive way. Despite the fact that most foreign investors engaged in profit taking by selling Indonesian assets, the IHSG managed to gain 0.69 percent to the level of 4,819.32. Trade volume decreased, while total value of transactions rose.

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On Thursday's trading day, the Indonesia Stock Exchange (IHSG) was tame and weakened again. Foreign market participants were mostly selling their Indonesian assets and influenced domestic investors to behave similarly. Most other Asian stock markets, however, turned positive and were followed by good European openings. It did not prevent the IHSG from losing 49.07 points, or 1.01 percent to 4,786.37. Trade volume increased, while total value of transactions decreased.

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Apparently, market participants were eagerly waiting for positive news regarding stimulus packages that various central banks will apply to boost local economies. Once the news spread, investors hunted for stocks that previously weakened. Moreover, increased manufacturing data from the USA and Europe contributed to positive market sentiments. Lastly, China indicated to maintain its economic pace of 7.5 percent GDP growth this year.

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After continuously reaching new record-high levels last week, the Indonesia Stock Exchange (IHSG) finally had to give up some of its gain and closed 1.04 percent lower. Declining Asian stock markets (excluding Japan's main index) and fears that the IHSG had already reached a (too) high level impacted on today's result. Market participants, who recently confirmed good corporate annual results of many companies by buying, now engaged in profit taking.

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Today, the Indonesia Stock Exchange (IHSG) reached yet another new record high as most market participants used the current positive market sentiments to maintain their stock portfolios, although part of the investors also took the chance to engage in profit taking. Most Asian stock markets gained significantly which was followed by positive openings of European stock indices. Both developments impacted heavily on the IHSG.

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