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Today's Headlines Rupiah

  • Renewed Pressures Push Indonesia's Rupiah to IDR 14,550 per US Dollar

    The Indonesian rupiah had been fairly stable against the US dollar since Bank Indonesia's aggressive 0.50 percent rate hike in late-June (a move that caught many by surprise). However, after the central bank of Indonesia decided to leave its benchmark interest rate unchanged at the July policy meeting (which was concluded on Thursday, 19/07), the rupiah has become under heavy pressure again.

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  • Current Account Deficit Indonesia Expected to Widen to 2.5% of GDP

    The current account deficit of Indonesia could widen to 2.5 percent - or more - of the nation's gross domestic product (GDP) in the second quarter of 2018 according to Bank Indonesia's Senior Deputy Governor Mirza Adityaswara. He added that a current account deficit below 3 percent of GDP is still in the safe zone. Dividend payouts are expected to put additional pressure on the Q2-2018 current account deficit of Indonesia.

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  • Impact of the Weak Rupiah on Indonesia's Food & Drink Industry

    In theory the weak rupiah makes Indonesian export products more competitive on the global market. However, when the content of those export products contain a high degree of imported raw materials, then the positive effect of a weak rupiah is disabled. And the situation is similarly complicated for those companies that import a high degree of raw materials to make products that are sold on the domestic market. They could of course simply raise retail prices. However, the consequence is that demand for the products could drop.

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  • Indonesia's Foreign Exchange Reserves Tumble for 5th Straight Month

    The central bank of Indonesia (Bank Indonesia) announced that the nation's foreign exchange reserves had fallen to USD $119.8 billion (per end June 2018), thus declining USD $3.1 billion compared to the position in the preceding month. As such, the recent trend continued: Indonesia's foreign exchange assets have now fallen for five straight months after touching a record high of nearly USD $132.0 billion in January 2018 (see table below).

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  • Gauge of Market Fear: Indonesia's Credit Default Swap Rising

    Risk perceptions on Indonesian debt have risen amid concerns over the fragile rupiah. So far in 2018 the Indonesian rupiah has depreciated around 6 percent against the US dollar due to US monetary tightening and simmering concerns over the outbreak of a global trade war. Waning risk perception is reflected by the rising credit default swap (CDS) of the five-year Indonesian bond.

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  • Currency of Indonesia: Rupiah Finding a New Equilibrium Rate?

    The central bank of Indonesia (Bank Indonesia) hiked its benchmark interest rate three times over the past six weeks - by a total of 1.00 percent to take the benchmark to the level of 5.25 percent - in order to defend the rupiah. Last Friday (27/06) Bank Indonesia surprised part of the market by implementing a 0.50 percent rate hike. As a result, the rupiah strengthened markedly. However, its impact on the rupiah performance seems very temporary. This week the rupiah is again depreciating, hovering around the IDR 14,400 per US dollar level.

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  • Bank Indonesia Raises Key Interest Rate by 50 bps to 5.25%

    As we had predicted this morning, Bank Indonesia decided to raise its benchmark interest rate by 50 basis points (bps) to 5.25 percent at the two-day June policy meeting that was concluded earlier today. Presumably markets had been expecting a 25 bps rate hike (therefore being priced in already) and therefore the central bank of Indonesia possibly felt it had to take a more aggressive approach to defend the Indonesian rupiah that had weakened beyond the IDR 14,400 per US dollar level.

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  • Market Participants Await Bank Indonesia's Policy Decision

    The Indonesian rupiah continues to slide on Friday (29/06) and is now hovering around the IDR 14,400 per US dollar level. The weak rupiah reaffirms analysts' expectations of seeing another interest rate hike. Today, the central bank of Indonesia (Bank Indonesia) will conclude its June policy meeting. But perhaps the crucial question is not "will Bank Indonesia raise its benchmark rate?" Possibly the more crucial questions are "by how much will it raise its rate?" and "what other policies will it implement to strengthen rupiah stability as well as financial stability?"

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  • Stocks & Currency Update Indonesia: Jakarta Composite Index & Rupiah

    Asian stocks and emerging market currencies continue to be under pressure on Thursday morning (28/06) amid uncertainty regarding US authorities' stance on Chinese investment in US tech companies, ongoing concerns over the impact of simmering global trade woes on economic growth, and rising crude oil prices. However, as we approach the lunch break there are some signs of a rebound in Asian markets.

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Latest Columns Rupiah

  • Indonesian Stocks & Rupiah Update: Down on Politics and IMF Forecast

    Indonesian Stocks & Rupiah Update: Down on Politics and IMF Forecast

    The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) took another dive on Wednesday (08/10). The decline was not only caused by the negative influence of declining stock indices in the USA and Europe on the previous day, triggered by the downgraded global economic growth forecast released by the International Monetary Fund (IMF) but also because the market responded negatively to the voting result for the post of speaker of the People’s Consultative Assembly (or MPR).

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  • Bank Indonesia Press Release: Key Interest Rate Kept at 7.50%

    Bank Indonesia decided to hold the key interest rate (BI rate) at 7.50 percent in October, with the Lending Facility and Deposit Facility rates kept at 7.50 percent and 5.75 percent, respectively. This level is expected to help control inflation at 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level. Despite stable domestic conditions, Bank Indonesia sees risks: contagion risk stemming from US monetary tightening and possible higher subsidized fuel prices.

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  • Rupiah Update Indonesia: Central Bank Ready to Intervene

    Bank Indonesia Governor Agus Martowardojo said that although the recent weakening trend of the Indonesian rupiah exchange rate is in line with the performance of other Asian currencies, the central bank is prepared to intervene in the market in an effort to support the currency and keep it in a comfortable range. On Monday (06/10), Bank Indonesia Executive Director Tirta Segara already stated that foreign exchange intervention was conducted in September 2014 in order to stabilize the rupiah exchange rate.

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  • Indonesian Stocks Rebound but Rupiah Continues to Depreciate

    Technically the benchmark stock index of Indonesia (Jakarta Composite Index, or IHSG) had to rebound after sharp declines during the last couple of trading days making Indonesian stocks relatively cheap. The IHSG was also supported by rising stock indices in Japan and Hong Kong that rose on strong US jobs data (although other Asian markets fell due to concerns about sooner-than-expected US interest rate hikes. Meanwhile, the rupiah continued to depreciate as the market is concerned about the political situation in Indonesia.

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  • Performance of the Indonesian Rupiah & Stocks in the Past Week

    Amid political uncertainty and a looming increase in US interest rates, Indonesian stocks and the rupiah exchange rate weakened considerably in the past week. Market participants are increasingly concerned about the situation in Indonesia’s parliament where a majority of political parties - named the Merah-Putih coalition (led by defeated presidential candidate Prabowo Subianto) - is expected to undermine president-elect Joko Widodo’s reform programs as well as the democratic foundations of the country.

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  • Stock Market Update Indonesia: Down on Politics and Global Data

    Indonesian stocks plunged considerably on Thursday (02/10). The country’s benchmark stock index (Jakarta Composite Index, abbreviated IHSG) declined 2.73 percent to 5,000.81 points, the largest drop in almost six months. This poor performance was caused by both external and internal factors. Externally, various weak economic data from the USA and Europe as well as an appreciating yen impacted negatively on Asian stock indices. Internally, market participants responded negatively toward the inauguration of the new parliament.

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  • Update Indonesian Rupiah & Stocks: Stronger on Economic Data

    Although Indonesia’s September 2014 inflation (0.27 percent m/m) and appreciating rupiah exchange rate had a positive impact on the performance of Indonesia’s benchmark stock index (Jakarta Composite Index, abbreviated IHSG) on Wednesday (01/10), its gain was limited by declining indices on Wall Street on the previous day as well as Indonesia’s August trade deficit (USD $318.1 million), which resulted in foreign net selling of worth IDR 388 billion of Indonesian stocks. The IHSG climbed 0.06 percent to 5,140.91 points.

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  • Despite Sharp Rupiah Depreciation, Indonesian Stocks Rise 0.18%

    The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rose 0.18 percent to 5,142.01 points on Monday (29/09) despite the sharp depreciation of the Indonesian rupiah exchange rate. Possibly market participants took advantage of relatively cheap blue chip stocks after the 1.3 percent drop on Friday (26/09) caused by negative market sentiments brought about by the parliament’s passing of a bill which abolishes direct voting of regional leaders. Foreign investors recorded net selling of IDR 542.4 billion.

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  • Stocks & Rupiah Update Indonesia: Performance Today

    Stocks & Rupiah Update Indonesia: Performance Today

    In line with the trend on other Asian stock indices, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) fell on Monday (22/09) amid profit taking after three days of gains. Not even the appreciating rupiah exchange rate and net buying of foreign investors (IDR 26.6 billion) were able to push Indonesia’s index into the green zone. The IHSG declined 0.15 percent to 5,219.80 points. All sectors on the Indonesia Stock Exchange (IDX) fell except for the consumer goods and finance sectors.

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  • Update Indonesian Stocks: Rising on Fed Speculation & Chinese Stimulus

    The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) closed 1.12 percent higher on Wednesday (17/09) supported by Tuesday’s positive stock indices on Wall Street as well as speculation that the US Federal Reserve will not raise its key interest rate yet. Today (17/09), the Federal Reserve will conclude its Federal Open Market Committee (FOMC) meeting. Lastly, after weak economic data, it was reported that China’s central bank (PBOC) injected USD $82 billion into the country's five largest banks.

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