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Today's Headlines Bank Indonesia

  • Bank Indonesia: Foreign Exchange Reserves Unchanged in September

    The official foreign exchange reserve assets of Indonesia’s central bank (Bank Indonesia) at end September 2014 were unchanged (from the preceding month) at USD $111.2 billion. Based on a Bank Indonesia statement, the reserves were under pressure due to an increase in foreign exchange demand (for government foreign debt payments and foreign exchange intervention in order to stabilize the Indonesian rupiah exchange rate), but supported by a global Islamic bonds issuance, oil & gas export revenue and growth of bank forex deposits.

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  • Consumer Confidence in Indonesia Falls Slightly in September

    A survey of Indonesia’s central bank (Bank Indonesia) shows that Indonesian consumer confidence declined slightly to 119.8 points in September 2014 (from 120.2 points in the previous month) on concerns that price increases will limit people’s purchasing power. These concerns are triggered by president-elect Joko Widodo’s plans to raise prices of subsidized fuels before the year-end in an effort to safeguard the country’s financial fundamentals. Widodo (popularly known as Jokowi) will be inaugurated on 20 October 2014.

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  • Economic Update Indonesia: Inflation, Trade Balance & Manufacturing Activity

    Statistics Indonesia (BPS) released various economic data today (01/10) - including inflation, the trade balance and manufacturing activity - that give a good indication about the state of the Indonesian economy. Although not all data was positive, market participants were content, evidenced by an appreciating rupiah exchange rate and rising Indonesian stocks. Based on the Bloomberg Dollar Index, the rupiah appreciated 0.43 percent to IDR 12,135 per US dollar, while the Jakarta Composite Index climbed 0.06 percent on Tuesday (01/10).

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  • Higher Interest Rates in 2015 Could Further Limit GDP Growth of Indonesia

    The economy of Indonesia, which has been slowing since 2011, will have difficulty to rebound in 2015 as the central bank’s key interest rate (BI rate) is expected to be raised again to avert capital outflows brought on by higher interest rates in the US and to combat accelerated inflation after domestic subsidized fuel prices have been raised by the new government led by president-elect Joko Widodo (Jokowi). After a GDP growth pace of 6.5 percent (y/y) in 2011, economic growth in Southeast Asia’s largest economy fell to 5.8 percent (y/y) in 2013.

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  • Indonesian Banks’ Non-Performing Loans Rising Sharply in Four Sectors

    Although Deputy Governor of the central bank of Indonesia (Bank Indonesia), Halim Alamsyah, said that the non-performing loan (NPL) level in Indonesia’s banking sector is currently safe at 2.24 percent (well below the five percent threshold which is considered safe), the institution has been monitoring the high level of NPLs in four sectors: construction, trade, mining and social services. The bank will study why the ratio has been growing - whether it is a temporary phenomenon or not - and search the correct policy approach to address this issue.

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  • Bank Indonesia’s Dilemma: Reducing or Maintaining the BI Rate at 7.50%?

    There are mixed opinions about the interest rate policy of the central bank of Indonesia (Bank Indonesia). Tomorrow (11/09), at the Board of Governor’s Meeting, the central bank will decide whether or not to change the country’s interest rates. Indonesia’s benchmark interest rate (BI rate) has been held at 7.50 percent for ten consecutive months. This relatively high figure managed to ease high inflation (which emerged after prices of subsidized fuel prices were raised in June 2013). However, it also further slowed economic growth.

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  • Bank Indonesia’s Foreign Exchange Reserves Rise slightly in August 2014

    The central bank of Indonesia (Bank Indonesia) announced that the foreign exchange reserves of Indonesia climbed slightly in August 2014. At the end of that month, the assets stood at USD $111.2 billion, up from USD $110.5 billion at the end of the previous month, fueled by strong oil and gas export revenue. These reserve assets can now adequately cover 6.5 months of imports or 6.3 months of imports and servicing of government external debt repayment, well above the international standards of reserves adequacy at three months of imports.

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  • Revising Regulations to Enhance Indonesia’s Foreign Exchange Trading

    Nanang Hendarsah, Deputy of Bank Indonesia’s financial task force, said that the central bank of Indonesia will issue two new regulations this week in an attempt to boost foreign exchange (FX) transactions in Indonesia by simplifying the bank’s previous regulations issued in 2005 and 2008 (PBI No. 10/28 on FX purchase at banks and PBI No. 10/37 on netting restrictions). Recent data from Bank Indonesia show that the amount of FX transactions in Indonesia has been lower compared to those recorded by its regional peers.

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  • Inflation in Indonesia: Easing Inflation Trend Continues in August 2014

    The latest Bank Indonesia survey on the topic of inflation suggests that Indonesia’s inflation pace in August 2014 is still relatively safe. Based on the survey, which monitored inflation in Southeast Asia’s largest economy up to the third week of the month and which usually forms a good indicator for the inflation figure at the month-end, Indonesian inflation in August will be lower than the 0.93 percentage point (month-to-month) of inflation recorded in the previous month. Inflation in Indonesia always shows a peak around in the period June to August.

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  • Bank Indonesia’s Monetary Policy Tight until Current Account Balance Improves

    The central bank of Indonesia (Bank Indonesia) indicated that it will only loosen its monetary policy provided that the country’s current account deficit narrows to a level of 2.5 percent of gross domestic product (GDP), which is considered sustainable, and inflation is kept within the range of 3.5 to 5.5 percent (year-on-year) in line with the central bank’s target range. The current account deficit is one of the main problems being faced by Southeast Asia’s largest economy today and causes concern among foreign and domestic investors.

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Latest Columns Bank Indonesia

  • Investors Concerned Ahead of Bank Indonesia Board of Governor's Meeting

    Both the Jakarta Composite Index (Indonesia's benchmark stock index) and the Indonesia rupiah exchange rate are under pressure this morning as market participants are waiting for results of the central bank's Board of Governor's meeting that is held today (12/12) in Jakarta. Speculation has emerged that Indonesia's central bank (Bank Indonesia) will raise its benchmark interest rate (BI rate) one more time in 2013 in order to combat the country's current account deficit as well as mitigate the impact of a possible winding down of QE3.

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  • Despite Unchanged BI Rate, Indonesia's Stock Index and Rupiah Down

    Although Indonesia's benchmark interest rate (BI rate) was kept at the level of 7.5 percent (in line with market expectation) today (12/12), it was not able to support the country's stock index. Indonesia's IHSG index fell 1.39 percent to 4,212.22 points. The index was negatively impacted by Asian stock indices that were down due to concerns about the looming end of the Federal Reserve's quantitative easing program. This made investors' positive reaction to the BI rate of temporary nature. Weak openings in Europe increased downward pressure.

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  • Business as Usual in Indonesia: a Day of Gain is Followed by a Day of Loss

    Business as Usual: a Day of Gain is Followed by a Day of Loss

    One of the main problems of Indonesia's benchmark stock index (IHSG) is the profit taking that immediately happens after a day of strong growth. On Wednesday (11/12), the IHSG index was plagued by profit taking since the start of the first trading session. Moreover, the index was impacted by mostly falling Asian stock indices as well as the Indonesia rupiah exchange rate which went above the IDR 12,000 per US dollar level again. The only support the IHSG received was just before its closing when European indices opened up.

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  • Indonesia Stock Index Up but Rupiah Exchange Rate Down on Tuesday

    Indonesia's benchmark stock index (the Jakarta Composite Index or IHSG) continued yesterday's rise on today's trading day (10/12), supported by indices on Wall Street that climbed due to the lower VIX index (Chicago Board Options Exchange Market Volatility Index) although Asia's stock indices were mixed, while the Indonesia rupiah exchange rate continued its decline. Indonesia's manufacturing stocks were up along with consumer, automotive and processed foods stocks.

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  • Indonesia Rupiah Exchange Rate: Fluctuating Performance on Monday

    After appreciating on Monday morning (09/12), the Indonesia rupiah exchange rate started to weaken against the US dollar in the afternoon. At 15:10:29 local Jakarta time, the rupiah stood at IDR 11,970 per US dollar in the Bloomberg Dollar Index, a 0.05 percent depreciation from the start of the day. The rupiah exchange rate is fluctuating due to positive sentiments caused by Indonesia's October trade surplus as well as China's low inflation and negative sentiments brought on by the looming end of the Federal Reserve's quantitative easing program.

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  • Indonesia Rupiah Exchange Rate: How Will Bank Indonesia Respond?

    In the morning of Thursday (05/12), Indonesia's rupiah exchange rate depreciated beyond the psychological level of IDR 12,000 per US dollar. In the Bloomberg Dollar Index, the rupiah fell 0.2 percent to IDR 12,011 as of 09:19:49. The main factor behind this decline is market participants' concerns about the end of the Federal Reserve's monthly USD $85 billion bond buying program. It is increasingly speculated that the winding down of this program will start sooner than expected.

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  • Indonesia's Jakarta Composite Index (IHSG) and Rupiah Continue Decline

    Indonesia's Jakarta Composite Index (IHSG) and Rupiah Continue Decline

    The continued presence of negative market sentiments made it impossible for Indonesia's Jakarta Composite Index (IHSG) to rebound. The looming end of the FED's quantitative easing program - which may be wound down sooner than expected - is a big cause for concern. The depreciating Indonesia rupiah exchange rate intensifies these concerns, particularly regarding companies that have exposure to volatile US dollar movements. Furthermore, investors are waiting for further US economic data as well as for Bank Indonesia's next meeting.

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  • Indonesia Stock Market News: Back to Reality as IHSG Falls 0.77%

    Apparently positive market sentiments brought on by the macroeconomic data released on Monday (02/12) did not last long. Yesterday, Indonesia's benchmark stock index (IHSG) was lifted by the October 2013 trade surplus and limited November inflation. However, investors are now back to reality and prefer to wait for results of Bank Indonesia's Board of Governor's meeting (12/12) and the Federal Reserve's FOMC meeting (17-18/12). The former will inform about Indonesia's interest rate, the latter about the future of quantitative easing.

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  • Indonesia Inflation Update: Consumer Price Index Moving Sideways

    The inflation rate of Indonesia rose slightly in November 2013 (month-to-month) and confirms estimations that inflation in Southeast Asia's largest economy is under control after having accelerated sharply due to the introduction of higher subsidized fuel prices June 2013. In recent months, inflation moved sideways and is expected to ease considerably in the first quarter of 2014. Indonesia's consumer price index rose 0.12 percent in November due to rising electricity, processed foods and health care costs.

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  • Indonesia's Rupiah Gains on Trade Surplus and China Manufacturing Data

    After five consecutive days of depreciation, the Indonesian rupiah exchange rate finally managed to strengthen against the US dollar. Bank Indonesia's Jakarta Interbank Spot Dollar Rate rose 0.26 percent to IDR 11,946 per US dollar on Monday (02/12). According to Bloomberg data, the rupiah rose 1.85 percent to IDR 11,744 as of 02:25:50 ET as market participants have reacted positively to Indonesian trade and inflation data that were released today: October showed a trade surplus, while in November inflation was kept at 0.12 percent.

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