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The central bank of Indonesia (Bank Indonesia) stated on Thursday (28/12) that it expects to see Indonesia's economic growth at 5.05 percent year-on-year (y/y) in full-year 2017, up modestly from 5.02 percent (y/y) in the preceding year. Bank Indonesia Governor Agus Martowardojo said the Indonesian economy is recovering unevenly yet gradually.
Bank Indonesia, the central bank of Indonesia, left its benchmark interest unchanged at the final (regular) policy meeting of 2017. The BI 7-day Reverse Repo Rate was kept at 4.25 percent on Thursday (14/12). Meanwhile, the deposit facility and lending facility were kept at 3.50 percent and 5.00 percent, respectively (effective per 15 December 2017).
Approaching the Federal Open Market Committee (FOMC) meeting - scheduled for 12-13 December 2017 - the Indonesian rupiah exchange rate remained stable on Monday (11/12). By 15:00 pm local Jakarta time, the rupiah had strengthened 0.01 percent to IDR 13,548 per US dollar (Bloomberg Dollar Index). However, several analysts warn that the rupiah is likely to depreciate if the US Federal Reserve will indeed raise its benchmark interest rate.
Indonesia's foreign exchange reserves fell in November 2017. At the end of November the nation's foreign exchange reserves stood at USD $125.97 billion, down from USD $126.55 billion at the end of the preceding month. Despite the decline, the exchange assets can still adequately cover 8.4 months of imports or 8.1 months of imports and servicing of government external debt repayments, well above international standards at 3 months of imports.
The central bank of Indonesia (Bank Indonesia) will conduct its final monthly policy meeting for 2017 on 13-14 December. Based on statements made by Bank Indonesia Deputy Governor Dody Budi Waluyo on Wednesday (06/12) at Bloomberg's Year Ahead Asia Conference, the benchmark interest rate of Indonesia will likely remain unchanged at 4.25 percent at this year's final policy meeting.
The central bank of Indonesia (Bank Indonesia) will soon issue a new regulation in which it bans the use of bitcoin for domestic payments starting from 2018. Bitcoin is a (virtual) digital currency that is traded at cryptocurrency exchanges for fiat currencies. According to Bank Indonesia, however, the use of bitcoin undermines the sovereignty of the Indonesian rupiah.
Bank Indonesia, the central bank of Indonesia, said the country's official foreign exchange reserves fell to USD $126.5 billion at the end of October 2017 (from the all-time record high level of USD $129.4 billion at the end of the preceding month).
Today, the central bank of Indonesia (Bank Indonesia) decided to keep its key interest rate - the seven day reverse repo rate - at 4.25 percent, a decision that had been expected by most - if not all - analysts as there have been rising pressures on the rupiah exchange rate after two surprise rate cuts in August and September, while there remain plenty of external matters that make investors careful about investing in emerging market assets.
Bank Indonesia held its key rate at 4.25 percent at the October 2017 policy meeting. This decision was in line with expectations. In fact, previously, Bank Indonesia officials had already indicated that they would pause their eagerness to ease monetary policy. Since January 2016, the central bank of Indonesia had already cut the benchmark interest rate eight times from 7.25 percent to 4.25 percent in an effort to boost economic growth.
The governor of Indonesia's central bank (Bank Indonesia), Agus Martowardojo, won the Governor of the Year award for the East Asia-Pacific region. The winner of the award was announced by Global Markets, a newspaper that is part of Euromoney Institutional Investor.
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The rebound that happened in the first session of Friday's trading day (23/08) gave hope that Indonesia's main stock index (IHSG) would end the disastrous week on a positive note. However, in the second session of the day market participants began selling Indonesian assets causing the index to fall again, although the fall was limited. In line with the Asian region, the index lost 0.04 percent to end at 4,169.83 points. Even the highly anticipated 'rescue package' of the Indonesian government was not able to support the index.
Concerns about Indonesia's weakening rupiah intensified on Wednesday (21/08) as the currency is now balancing on the psychological boundary of IDR 11,000 per US dollar. The rupiah continued its downward spiral today although its decline was limited due to the intervention of Indonesia's central bank (Bank Indonesia) that started selling US dollars again in an effort to support the rupiah. According to data compiled by Reuters, the rupiah has now fallen 10.7 percent this year.
On Tuesday (20/08), Indonesia's benchmark stock index (IHSG) continued its decline with its fourth consecutive day of losses. Amid major concerns about Indonesia's economic growth, high inflation, tighter monetary policy and current account deficit, the IHSG fell 3.21 percent to 4,174.98 points. It means that the index now stands about 21 percent lower than its record peak in May 2013. Foreign investors have been pulling money out of the Indonesian market. According to Bloomberg, about USD $255 million has been retracted in the last two days.
After two days of growth, Indonesia's main stock index (IHSG) became victim of profit taking on Thursday (15/08). Particularly domestic investors were eager to sell their Indonesian assets. Falling indices on Wall Street on Wednesday (14/08) in combination with global uncertainty about the end of the Federal Reserve's quantitative easing program made a negative impact on Asian stock indices, including the IHSG. Indonesia's central bank's decision to keep its benchmark interest rate at 6.50% was well-received by most investors.
The foreign exchange reserves of Indonesia keep on falling from its historical peak of USD $124.64 billion in August 2011 to USD $92.67 billion at the end of July 2013. This development seems to highlight long-standing weaknesses in Indonesia's sovereign's external finances, as credit agency Fitch Ratings detected on several occasions before. The republic of Indonesia is currently characterized by four deficits, to wit a current account deficit, a balance of payments deficit, a trade balance deficit and a fiscal deficit.
After Wall Street turned back into the green zone on Tuesday (13/08) and was accompanied by continued rising stock indices in Europe, it provided good support for Asian stock indices on Wednesday (14/08), including Indonesia's main stock index (IHSG). Indonesian mining commodities and plantation stocks fell but these losses were offset by rising big cap stocks (particularly finance stocks) and speculation that Indonesia's central bank will keep its benchmark interest rate (BI rate) at 6.50 percent.
Although the holy fasting month of Ramadan and subsequent Idul Fitri celebrations always provide a boost for national economic growth in Indonesia as domestic consumption tends to peak, analysts believe that it will not contribute significantly to the government's 6.3 percent GDP growth target this year. During Ramadan and Idul Fitri (known as Lebaran), Indonesian consumers generally spend more on food products, clothes, shoes, tickets for transport and hotels than in other months, and thus lead to increased economic activity.
Worldwide, most stock indices fell on Wednesday (07/08), particularly Japan's Nikkei index, after it has been speculated that the Federal Reserve may phase out the third round of its quantitative easing program in September 2013. This program, involving a monthly USD $85 billion bond-buying package, aims to spur US economic growth while keeping interest rates low. However, one important side effect has been rising stock markets around the globe. Now the end of QE3 is in sight, investors shy away from riskier assets.
Indonesia’s inflation rate in July 2013 was significantly higher than analysts had previously estimated. The country’s July inflation figure accelerated to 3.29 percent. On year-on-year basis, it now stands at 8.61 percent, the highest inflation rate since many years. Particularly food commodity and transportation prices rose steeply. The main reason for Indonesia's high inflation is the reduction in fuel subsidies. In late June, the government increased the prices of subsidized fuels in order to relieve the ballooning budget deficit.
Last week (22-26 July 2013), Indonesia's main stock index (IHSG) ended 1.39 percent down at 4,658.87. The daily value of transactions on the regular market narrowed to an average of IDR 3 trillion (USD $300 million) from IDR 3.84 trillion in the previous week. Foreigners still recorded net sales amounting to IDR 92.9 billion (USD $9.3 million). Lack of positive sentiments, financial results of companies that were below expectation and the continued weakening of the rupiah against the US dollar resulted in the decline of the index.
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