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The central bank of Indonesia (Bank Indonesia) announced that the nation's foreign exchange reserves stood at USD $124.9 billion at the end of April 2018, down from USD $126.0 billion one month earlier. This decline is in line with expectations as the central bank had already confirmed it is intervening in the market to defend the Indonesian rupiah amid broad-based US dollar strength.
Indonesia Investments expects to see Bank Indonesia raising its benchmark interest rate at least once in 2018 in order to relieve pressures on the Indonesian rupiah. Rising expectations that the US Federal Reserve will implement four interest rate hikes in 2018, while the 10-year US treasury yield passed beyond the 3 percent line, have resulted in major pressures on emerging market assets, including Indonesia's rupiah and stocks.
Indonesia's Jakarta Composite Index continued to be plagued by a sell-off on Thursday (26/04) after already having fallen 2.40 percent on the preceding trading day. Today the benchmark index of Indonesia plunged another 2.81 percent to 5,909.20 points amid climbing US treasury yields (passing beyond the psychological boundary of three percent).
The central bank of Indonesia (Bank Indonesia) expects the nation’s trade balance to swing into surplus in March 2018, after recording two monthly trade deficits in January and February (USD $756 million and USD $116 million, respectively), as pressures from imports of raw materials and capital goods are seen sliding. Incumbent Bank Indonesia Governor Agus Martowardojo said a USD $1.1 billion surplus is possible in the third month of 2018, implying the trade balance would show a surplus, overall, in the first quarter of 2018.
Indonesia's foreign exchange reserves fell from a record high of USD $131.98 billion at the end of January 2018 to USD $128.06 billion at the end of February 2018. In a statement released on its official website, the central bank of Indonesia (Bank Indonesia) attributed the decline in reserve assets is to the use of foreign exchange to repay government external debt as well as efforts to stabilize the Indonesian rupiah exchange rate.
Indonesian President Joko Widodo threw his support behind Perry Warjiyo for the position of central bank governor in the 2018-2023 period. Over the weekend Widodo stated that Warjiyo is his sole nominee for the key function at the nation's central bank (Bank Indonesia). The five-year term of incumbent Bank Indonesia Governor Agus Martowardojo will end in May 2018.
The central bank of Indonesia (Bank Indonesia) is expected to leave its interest rates regime unchanged at the monthly policy meeting in February (14-15 February 2018) amid (expectations of) tighter monetary policies in the United States (USA), European Union (EU) and Japan.
The five-year term of Bank Indonesia Governor Agus Martowardojo will end on 22 May 2018 and therefore it is time to take a look at his potential successors. However, it could very well be that Martowardojo is allowed to have a second five-year term as central bank chief.
Bank Indonesia, the central bank of Indonesia, again emphasized that it will sanction those payment system operators and financial technology operators in Indonesia (both bank and non-bank institutions) that facilitate transactions using virtual currency, such as the Bitcoin, Ethereum, Dash, Litecoin and Ripple (also known as cryptocurrencies).
Indonesia's current account balance is expected to show a deficit for the next five years. The central bank of Indonesia (Bank Indonesia) does not rule out a surplus within that period but it would require some serious work in terms of structural reform-making. Indonesia started to record current account deficits in late-2011 due to the ballooning oil import bill (before the government slashed energy subsidies) and weak commodity prices after 2011.
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On Thursday 12 December 2013, Indonesia's central bank (Bank Indonesia) announced that the country's benchmark interest rate (BI rate) remains unchanged at the level of 7.50 percent in December 2013. This announcement was a bit surprizing as about 80 percent of analysts expected Bank Indonesia to raise the BI rate in order to support the depreciating Indonesia rupiah exchange rate. Starting the year at IDR 9,670 per US dollar, the rupiah has fallen around 25 percent to IDR 12,081 per US dollar.
The central bank of Indonesia (Bank Indonesia) estimates that Indonesia's current account deficit will ease to 3.5 percent of the country's gross domestic product (GDP) by the end of 2013. Indonesia's wide current account deficit has been one of the major financial troubles this year and managed to weaken investors' confidence in Southeast Asia's largest economy. Thus, Indonesia became one of the hardest hit emerging countries after the Federal Reserve started to speculate about an ending to its quantitative easing program.
In Bank Indonesia's board of governors' meeting, which was held on Thursday (12/12), it was decided to maintain the country's benchmark interest rate (BI rate) at 7.50 percent. This decision was in line with market expectation but was unable to support the Jakarta Composite Index and rupiah exchange rate. The lending facility and deposit facility interest rates were also maintained at 7.50 percent and 5.75 percent respectively. Bank Indonesia decided not to change the rate as Indonesia's inflation outlook for 2014 is still within target.
With slowing economic growth and a stricter monetary policy approach of the central bank, Indonesia's ceramic industry is expected to record slowing growth in 2014. This year, the country's ceramic sales are projected to amount to 400 million square meters (m²). About 12 percent of this amount is exported to countries abroad. However, in 2014, sales are expected to plunge by 5 to 10% to 360-380 million m². A weakening rupiah and slowing property sector, which accounts for significant ceramic demand, are the major causes of the decline.
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.
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.
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.
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.
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.
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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