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Today's Headlines Bank Indonesia

  • Bank Indonesia: November Inflation and October Trade Balance Improving

    Inflation in November 2013 continued to show a decelerating trend at 0.12 percent (month-to-month) or 8.37 percent (year-on-year). Although higher compared to October 2013 inflation (0.09 percent), November inflation was lower than its historical pattern in the last five years. The low inflation rate was influenced by deflation in the volatile food group with deflation of 0.57 percent (mtm), a result of the correction in chilli prices, especially in Java and eastern region of Indonesia as well as the decline in the chicken meat price in almost all areas of Indonesia.

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  • Which Sectors are Vulnerable to Indonesia's Slowing Lending Growth?

    Bank Indonesia (Indonesia's central bank) has expressed that it will support slowing credit growth in the country's banking sector next year in order to foster a more stable financial environment amid a complex external and internal context. In recent years, credit growth in Indonesia has grown over 20 percent annually, while in 2013 it is expected to slow to between 18 and 20 percent amid a tighter policy regime. In 2014, Bank Indonesia targets credit growth between 15 to 17 percent. As a result banks will be more cautious in their lending approach.

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  • Martowardojo: Indonesian Inflation Limited in November 2013

    Agus Martowardojo, Governor of Bank Indonesia, expects Indonesia's November inflation rate to be modest at 0.05 to 0.1 percent (month-to-month). If Martowardojo's expection will be met then it means that inflation in Southeast Asia's largest economy is under control as November would be the third consecutive month of low inflation (or deflation). Inflation had accelerated significantly since June 2013 after the government raised prices of subsidized fuels and might reach 9 percent (yoy) by the end of 2013.

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  • Indonesia's Depreciating Rupiah Rate Continues its Downward Spiral

    The Indonesian rupiah continued its downward spiral on Monday morning (25/11). The central bank's mid rate fell 0.14 percent to IDR 11,722 per US dollar. Last week, the rupiah fell amid negative market sentiments brought on by the result of the Federal Reserve's FOMC meeting. The result seems to indicate that it will not take long before the quantitative easing program will be wound down. Contrary to the Australian dollar as well as the Indian rupee, news about the forthcoming financial reformation in China is unable to the support the rupiah.

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  • In Anticipation of Tapering, Bank Indonesia May Raise its BI Rate Again

    In Anticipation of Tapering, Bank Indonesia May Raise its BI Rate Again

    Several analysts expect that the central bank of Indonesia (Bank Indonesia) will raise its key interest rate (BI rate) again in the first Semester of 2014 in order to anticipate the winding down of the Federal Reserve's monthly USD $85 billion stimulus program (quantitative easing). Currently, the BI rate is set at 7.50 percent but analysts say that the market should be prepared for a hike to 8.0 percent in the first half of 2014. Between June and November 2013, Bank Indonesia has already raised its benchmark interest rate from 5.75 to 7.50 percent.

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  • Fitch Ratings Affirms Indonesia's Sovereign Credit Rating at BBB-/Stable

    Fitch Ratings Affirms Indonesia's Sovereign Credit Rating at BBB-/Stable

    Fitch Ratings, one of the three major global rating agencies, affirmed Indonesia's sovereign credit rating at BBB- with a stable outlook. In a press release, the rating agency mentioned four key factors that led to the affirmation of the sovereign rating. These are: good policy management by Indonesia's central bank (Bank Indonesia) and government amid external pressures, relatively high economic growth, prudent fiscal management (resulting in low public debt), and a strong banking sector (confirmed by multiple stress tests).

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  • Agus Martowardojo Comments on Indonesia's Macroeconomy in 2014

    Agus Martowardojo Comments on Indonesia's Macroeconomy in 2014

    Agus Martowardojo, Governor of Indonesia's central bank, expects the Indonesian economy to consolidate in 2014. The country is currently experiencing an economic correction with GDP growth slowing to 5.62 percent in the third quarter of 2013. Martowardojo said that the current account deficit still needs time to reach a healthy level. Indonesia's current account deficit stood at USD $8.4 billion (equivalent to 3.8 percent of the country's GDP) in the third quarter of 2013, down from USD $9.8 billion (4.4 percent of GDP) in the second quarter.

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  • QE3 and BI Rate Concerns Impact on Indonesia's Stock Index and Rupiah

    QE3 and BI Rate Concerns Impact on Indonesia's Stock Index and Rupiah

    Concerns about the looming end of the Federal Reserve's monthly USD $85 billion stimulus program (known as quantitative easing or QE3) in combination with the deteriorating domestic economy of Indonesia has caused Indonesia's benchmark stock index (IHSG) to plunge 1.95 percent in the first trading session of 13 November 2013. The Indonesian rupiah exchange rate depreciated 0.28 percent to IDR 11,600 according to Bloomberg. These developments happen one day after the decision of Indonesia's central bank to raise the BI rate to 7.50 percent.

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  • Bank Indonesia Expects Indonesia's Economy to Grow 5.7% in 2013

    Agus Martowardojo, Governor of Indonesia's central bank (Bank Indonesia), stated that the country's economy is expected to grow 5.7 percent in 2013. Bank Indonesia believes GDP growth in the fourth quarter of 2013 to fall below the growth figure realized in Q3-2013 (5.62 percent). Martowardojo said that the government needs to continue measures to improve the country's exports, while trying to curtail imports of oil and gas as domestic demand for fuels remained high, even after the increase in prices of subsidized fuels in June 2013.

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  • Indonesian Foreign Exchange Reserves at USD $97.0 billion in October 2013

    Indonesian Foreign Exchange Reserves at USD $97.0 billion in October 2013

    Indonesia's foreign exchange (forex) reserves totalled USD $97.0 billion at the end of October 2013, up USD $1.3 billion from the previous month (USD $95.7 billion). Consequently, the current level of foreign exchange reserves is equivalent to 5.5 months of imports and the government’s foreign debt payment. Bank Indonesia considers the current stockpile of forex reserves adequate to bolster external sector resilience and is above international adequacy standards.

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Latest Columns Bank Indonesia

  • 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

    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

    Indonesia's Rupiah Gains on Trade Surplus and China's 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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  • Analysis of the Indonesian Rupiah Exchange Rate in November 2013

    On Friday (29/11), the last trading day of November 2013, the Indonesian rupiah exchange rate continued its downward spiral. The Jakarta Interbank Spot Dollar Rate¹ fell 0.39 percent to IDR 11,970 per US dollar amid concern about the winding down of the quantitative easing program, Indonesia's wide current account deficit, a disappointing US dollar-denominated bond auction and surging US dollar demand for earnings repatriation as well as foreign debt payment. Considering the full month of November, the rupiah depreciated 6.61 percent.

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  • Indonesia Financial Market Update: Indonesia's Current Account Deficit

    Currently, one of Indonesia's main financial issues (and one which puts serious pressures on the Indonesian rupiah exchange rate) is the country's wide current account deficit. According to data from Statistics Indonesia, Indonesia's current account deficit totaled USD $8.4 billion in the third quarter of 2013. This figure is equivalent to a whopping 3.8 percent of Indonesia's gross domestic product (GDP). Generally, a current account deficit that exceeds 2.5 percent of GDP is considered unsustainable.

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