Amid an improving trade balance, Indonesia’s foreign exchange reserves rose to USD $100.7 billion at the end of January 2014, according to a press release of Indonesia's central bank (Bank Indonesia). Compared to December 2013, the reserves increased USD $1.3 billion. These reserves are sufficient to finance 5.7 months of imports or 5.6 months of imports and servicing of government external debt, which is well above the international standard of reserve adequacy at 3 months of imports.

Read more ›

The use of bitcoin, the hotly debated digital currency that was launched in 2009, is banned by the central bank of Indonesia (Bank Indonesia). This week, Bank Indonesia released a press release in which it states that the bitcoin and other virtual currencies are not considered as currencies nor legal payment instruments in Indonesia. After China, Denmark and Russia, Indonesia has become the next country to ban the use of the bitcoin as it can jeopardize the country's financial stability according to the assessment of the bank.

Read more ›

The central bank of Indonesia (Bank Indonesia) stated that economic growth during the fourth quarter of 2013 was recorded at 5.72 percent (yoy), thus having increased compared to the previous quarter (5.63 percent, yoy), and which is also higher than Bank Indonesia's estimate (5.7 percent). With this development, the overall economic expansion in 2013 reached 5.78 percent. Bank Indonesia considers that the fundamental condition of Indonesia’s economy is still relatively robust.

Read more ›

Although China's HSBC Purchasing Managers’ Index (PMI) in January 2014 fell below the 50.0 mark thus indicating contracting manufacturing, other Asian countries, including Indonesia, posted expanding manufacturing. Indonesia's HSBC Manufacturing PMI read 51.0 in the first month of the year, its highest reading since June 2013 and up from 50.9 in December 2013. However, this limited expansion also raised concerns that the policy tightening of Indonesia's central bank (Bank Indonesia) has not been as effective as hoped for.

Read more ›

Credit growth in Indonesia's banking sector in 2014 is estimated to range between 17 and 18 percent. This estimation is higher than the central bank's target of 15 to 17 percent but lower than credit growth in 2013. According to Indonesia's Financial Services Authority (Otoritas Jasa Keuangan, OJK), this pace of growth is at a safe level. Third party funds are projected to grow 16 to 16.5 percent, while the OJK did not provide an estimation of the loan to deposit ratio (LDR) yet although it did say that the LDR was at a safe level too.

Read more ›

On Sunday (26/01), Indonesia's National Disaster Mitigation Agency (BNPB) reported that the floods in Jakarta have led to 23 casualties (due to drowning, electrocution or the impossibility for sick people to reach the hospital) in the last two weeks in Indonesia's capital city, while almost 28,000 people are still displaced from their homes. The good news, however, is that in many parts of Jakarta floodwaters have begun to subside since the end of last week although several neighborhoods remain flooded up to this day.

Read more ›

Contrary to reports last week, the central bank of Indonesia (Bank Indonesia) expects that the country's January inflation rate may exceed 1 percent due to the disturbance of food products distribution amid severe floods in several cities in Indonesia, particularly Jakarta and Manado. Higher food prices are expected to add 0.3 percent to the monthly inflation rate. Apart from the flood issue, higher LPG as well as electricity tariffs (in the industry sector) will also contribute to January 2014 inflation.

Read more ›

Today (21/01), the government of Indonesia auctions rupiah-denominated state bonds of IDR 10 billion (USD $833 million) in order to reap funds to finance targets set in the government's 2014 state budget (APBN 2014). The bonds, involving the new issuance of SPN12150108 and re-openings of series FR0069, FR0070, and FR0071, have a nominal value of IDR 1 million each. Series SPN12150108 is issued at a discount yield. The central bank of Indonesia (Bank Indonesia) organizes the auction using a multiple price method.

Read more ›

The central bank of Indonesia (Bank Indonesia) expects that the country will record another monthly trade surplus in December 2013. Perry Warjiyo, Deputy Governor of Bank Indonesia, said that the December trade balance is estimated to record a USD $785 million surplus, thus slightly improving from the USD $776.8 million surplus in November 2013. If Bank Indonesia's forecast is realized then it would be the third consecutive month in which Indonesia posts a trade surplus. This is important  to improve the country's financial stability.

Read more ›

Traditionally in the first month of the year, heavy rainfalls plague certain areas of Indonesia, particularly parts of Java, Kalimantan and Sumatra as the rainy season hits its peak. These weather conditions cause social problems as tens of thousands of people need to relocate as well as economic turmoil due to disrupted harvests and logistic trouble amid bad connectivity. Governor of Indonesia's central bank (Bank Indonesia), Agus Martowardojo, stated that the current weather conditions may result in higher inflationary pressures in January.

Read more ›

Indonesia's main stock index (IHSG) continued its weakening trend this week. The index fell 0.93 percent to 4,674.12 on Thursday (25/07). This downward movement today was in line with most other Asian stock indices. All sectoral indices of the IHSG weakened, except for the miscellaneous industry. Indonesian blue chips, in particular, were under pressure. Unilever Indonesia fell 3.38 percent and Bank Mandiri lost 3.37 percent. Trade was relatively quiet with value of transactions at IDR 4.5 trillion (USD $441.2 million).

Read more ›

Indonesia's main stock index (IHSG) was not able to continue yesterday's rise as investors, particularly domestic investors, engaged in profit taking. Foreign investors, who were net buyers of Indonesian assets, were not able to guide the IHSG to positive territory. Mixed Asian stock indices, responding to weak Chinese data, did not support Indonesia's index. Moreover, market participants expect that the rupiah will continue its weakening trend and have begun speculating whether the benchmark interest rate (BI rate) will be raised again.

Read more ›

Yesterday's rising indices on Wall Street, high expectations of companies' financial reports and positive statements regarding economic growth in China resulted in a good day at the Indonesia Stock Exchange (IDX). Indonesia's main stock index, the IHSG, rose 1.88 percent to 4,767.16 on Tuesday (23/07), even though technical indicators seemed to predict a weakening of the index. Also the continued fall of the Indonesian rupiah did not turn investors away from the market. In fact, foreign investors were net buyers of Indonesian stocks.

Read more ›

The Indonesian rupiah (IDR) is experiencing one of its worst losing streaks in a decade. On Friday (19/07), the currency weakened to IDR 10,070 against the US dollar, which implies a devaluation of 4.14% in 2013 so far. The central bank of Indonesia, Bank Indonesia, does all it can to support the currency: the country's lender of last resort supplies dollars to the market triggering the reduction of foreign reserves from USD $105 million at end-May to $98 million at end-June, and raised its benchmark interest rate (BI Rate) by 50 bps to 6.50%.

Read more ›

Indonesia's main stock index (IHSG) went up 0.89 percent to 4,720.44 on Thursday (18/07). The index was supported by developments in the United States. On Wednesday (17/07), Ben Bernanke spoke to the US Congress and said that the Federal Reserve is likely to continue its bond-buying program in 2013 and may gradually withdraw the quantitative easing program in 2014. But only if economic recovery of the US provides the good context. This message supported the IHSG although foreign investors continued to record a net sale.

Read more ›

Starting from 1 September 2013, the minimum down payment for the purchase of a second house or apartment (bigger than 70 m²) in Indonesia will be raised to 40 percent. Indonesia's central bank (Bank Indonesia) implements this new rule to avoid a possible credit bubble in Indonesia's property sector. The country's property sector has been booming in recent years, giving rise to many new property projects, soaring profits for property companies (as well as impressive stock performance) and significantly rising property prices.

Read more ›

Retail sales in May 2013 rose 1.5 percent (month to month) or 8.6 percent (year on year) in Indonesia according to a publication of Indonesia's central bank (Bank Indonesia) released on Tuesday evening (16/07). The report made a positive impact on today's trading day as stocks in Indonesia's consumer goods sector rose 2.5 percent. Indonesia's main stock index (IHSG) gained 0.75 percent to end at the level of 4,679.00 points. Foreigner investors are still mostly avoiding the Indonesian stock market, but did record a net purchase today.

Read more ›

Amid widespread profit taking, Indonesia's main stock index (IHSG) was able to post another day of limited growth on Tuesday (16/07). Asian stock indices, including the IHSG, were supported by rising American stock indices on Monday (15/07). Investors seem to be confident that Q2-2013 results of various Indonesian companies are positive and therefore engaged in stock trading although foreign investors were still mostly selling their Indonesian assets. At the end of today's trading day, the IHSG rose 0.18 percent to 4,644.04.

Read more ›

After finishing last week with three consecutive days of gains, Indonesia's main stock index (IHSG) reached up to 4,633.11. However, its movement is still rather volatile. Property, finance and consumption stocks were sold by investors after seeing the benchmark interest rate raised by Bank Indonesia (by 50 bps to 6.50 percent) on Thursday (11/07), while metal stocks formed the main supporter of the index at the end of the week. Trading volume in the regular market hit 5.2 trillion and foreigners recorded net purchases of IDR 288 billion.

Read more ›

In line with the general trend in the Asian region, Indonesia's main stock index (IHSG) rose 0.63 percent to 4,633.11 on Friday (12/07). One of the sectoral indices that did not follow this trend was Indonesia's property sector, which fell 0.66 percent on Friday. Since early June (and in line with large capital outflows), Indonesian property shares have experienced a significant fall of about 20 percent. Moreover, Bank Indonesia's decision to raise its benchmark interest rate by 50 bps to 6.50 percent will most likely add downward pressure on the sector.

Read more ›