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Today's Headlines BI Rate

  • Cement Sales in Indonesia Rise on Infrastructure and Property Projects

    Cement sales in Indonesia surged 21 percent month-to-month (m/m) to 5.6 million ton in September 2014 from 4.6 million ton in the preceding month. Widodo Santoso, Chairman of the Indonesian Cement Association (ASI), said that the increase in Indonesian cement sales was supported by the start of a number of central and regional government infrastructure projects. Santoso also detected an increase in development of property projects. Infrastructure and property are the sectors that absorb most cement.

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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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  • Indonesia Investments' Newsletter of 14 September 2014 Released

    On 14 September 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic topics such Indonesia’s fuel subsidies, economic growth in 2015, monetary policy of Bank Indonesia, the Anas Urbaningrum corruption case, emerging Indonesian companies on a global scale, and more.

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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 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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  • Bank Indonesia Expected to Keep Key Interest Rate (BI Rate) at 7.50%

    The central bank of Indonesia (Bank Indonesia, BI) is expected to keep its benchmark interest rate (BI rate) at 7.50 percent at Thursday’s Board of Governors’ Meeting (14/08) as inflation has eased to 4.53 percent (year on year) in July while the country’s current account deficit may nearly double in the second quarter of 2014 to four percent of gross domestic product (GDP) from 2.06 percent of GDP in the previous quarter. Most analysts expect that Bank Indonesia will maintain the current BI rate for the remainder of 2014.

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  • Foreign Banks in Indonesia Post Large Profit on Rupiah Depreciation

    According to data from the Financial Services Authority (OJK), foreign banks operating in Indonesia have posted great profit growth in the January to May 2014 period. Combined, these foreign banks have recorded a 94.36 percentage point growth (year-on-year) in profit to IDR 3.79 trillion (USD $323.9 million) in the first five months of this year. The reason behind this jump in profit is the sharply depreciated rupiah exchange rate. Over the course of 2013, the rupiah fell over 25 percent against the US dollar.

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  • Forecast of Indonesian July Inflation and August Benchmark Interest Rate

    The pace of Indonesian inflation in July 2014 is expected to be in the range of 0.60 to 0.75 percent (month-on-month). If realized, this would be one of the lowest July inflation figures in recent Indonesian history. Traditionally, the month of July brings high inflationary pressures as consumers spend more on food products and other consumer goods as well as transportation amid the holy fasting month of Ramadan and subsequent Idul Fitri celebrations (which also involves the mudik tradition).

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  • Indonesia Investments' Newsletter of 13 July 2014 Released

    Indonesia Investments' Newsletter of 13 July 2014 Released

    On 13 July 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve political and economic topics such as the presidential election, an analysis of the interest rate environment, car sales, IPOs on the Indonesia Stock Exchange, a tender announcement, and more.

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  • After Unofficial Jokowi Win, Euphoria on Indonesian Markets Starts to Wane

    After a trading week that was characterized by high gains in the stock and financial markets on optimism that Joko Widodo (Jokowi) will become the next president of Indonesia, both the Indonesian rupiah exchange rate and benchmark Jakarta Composite Index fell today (11/07). This seems an obvious sign that the euphoria about a Jokowi win has waned and investors are looking again to the true economic fundamentals of Southeast Asia’s largest economy. By 13:00 pm local Jakarta time, the Jakarta Composite Index had fallen 1.66 percent.

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Latest Columns BI Rate

  • Interest Rate Environment: Why Bank Indonesia Left it Unchanged?

    Interest Rate Environment: Why Bank Indonesia Left it Unchanged?

    Indonesia’s central bank (Bank Indonesia) decided to hold the country’s key interest rate (BI rate) at 7.50 percent, the deposit facility rate at 5.50 percent, and the lending facility rate at 8.00 percent at the Board of Governor’s Meeting conducted on Tuesday 17 March 2015. Bank Indonesia said that its decision is in line with its ongoing efforts to push inflation back to the target range of 4±1 percent for both 2015 and 2016, and to guide the country’s current account deficit towards a healthier level at 2.5-3 percent of GDP in the medium term.

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  • Economy of Indonesia: Inflation, Trade, Interest Rates & Rupiah Update

    Indonesia’s consumer price index fell for the second consecutive month in February 2015, recording deflation of 0.36 percent month-on-month (m/m) in February, while on an annual basis Indonesian inflation eased to 6.29 percent (y/y), down from 6.96 percent (y/y) in the preceding month. Inflationary pressures declined primarily on the back of lower prices of chili peppers and fuel. Easing inflation in Southeast Asia’s largest economy may provide room for Indonesia’s central bank (Bank Indonesia) to cut interest rates further this year.

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  • Analysis Performance of the Indonesian Rupiah Exchange Rate

    The Indonesian rupiah exchange rate continued to depreciate on Monday (02/03). According to the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.30 percent to IDR 12,970 per US dollar, a six-year low. Apart from general bullish US dollar momentum in recent months (amid monetary tightening in the USA), the rupiah weakened due to Bank Indonesia’s signals that it tolerates a weaker currency in a move to boost exports (limiting the country’s current account deficit), and due to China’s interest rates cut.

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  • Bank Indonesia Lowers Key Interest Rate in Surprise Move

    In a surprise move, the central bank of Indonesia (Bank Indonesia) decided to lower its key interest rate (BI rate) by 25 basis points to 7.50 percent at the Board of Governor’s Meeting on Tuesday (17/02). The deposit facility rate (Fasbi) was also lowered by 25 basis points (to 5.50 percent), while the lending facility rate remained steady at 8.00 percent. In a press release the central bank stated that the current policy direction is estimated to moderate the country’s wide current account deficit further, while inflation remains under control.

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  • Analysis Indonesian Rupiah; Factors that Influence the Rupiah

    The Indonesian rupiah strengthened on Monday (16/02) as the country’s twin current account and trade balances improved, while the US dollar weakened on disappointing US retail sales and on optimism that Greece will remain a member of the Eurozone. Meanwhile, Indonesia's Finance Ministry held a successful auction today in which it sold IDR 12 trillion (USD $942 million) of conventional bonds. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.35 percent to IDR 12,753 per US dollar based on Monday (16/02).

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  • Economic Update Indonesia: What about Economic Growth in 2015?

    Although Indonesia’s economic growth slowed further in 2014, there is optimism that growth will accelerate in 2015 despite sluggish global economic conditions (curbing Indonesia’s export performance) and Bank Indonesia’s relatively high interest rate environment. Indonesia’s central bank has raised its BI rate several times over the past one and a half years in an effort to combat high inflation (caused by fuel price hikes), curb capital outflows ahead of US monetary tightening, limit the current account deficit and support the rupiah.

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  • Indonesian Rupiah & Stocks Fall on Economic Concerns and Oil Price

    Indonesian Rupiah & Stocks Fall on Economic Concerns and Oil Price

    The Indonesian rupiah exchange rate depreciated on Wednesday (14/01) as global oil and other commodity prices continued to fall thus casting a negative spell on Indonesia’s currency. The rupiah depreciated 0.11 percent to IDR 12,614 per US dollar according to the Bloomberg Dollar Index. Market participants are concerned about the negative influence of low commodity prices on Indonesia’s export performance. Southeast Asia’s largest economy has had to cope with a wide trade and current account deficit in recent years.

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  • Rupiah Update Indonesia: Stronger on US Jobs Data

    Rupiah Update Indonesia: Stronger on US Jobs Data

    In line with the performance of other Asian emerging currencies, Indonesia's rupiah exchange rate appreciated on Monday (12/01) as the fall in US wages (released late last week) caused speculation that the Federal Reserve will - for now - delay its plan to start raising US borrowing costs. Despite solid growing US non-farm payrolls in December 2014, US wages (average hourly earnings) fell the most in eight years. Indonesia’s rupiah appreciated 0.38 percent to IDR 12,599 per US dollar according to the Bloomberg Dollar Index.

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  • Fitch Ratings Keeps Indonesia’s Sovereign Rating at BBB-/Stable

    International credit rating agency Fitch Ratings maintained Indonesia’s sovereign rating at BBB-/stable outlook (investment grade). Baradita Katoppo, President Director of Indonesia’s Fitch Ratings branch, said that the firm is positive about the country’s financial fundamentals and prudent fiscal policy as the central bank has showed to prefer stability over growth, resulting in slowing credit growth and rising foreign exchange reserves in Southeast Asia’s largest economy. Economic growth is expected to fall to 5.1 percent (y/y) in 2014.

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  • Macroeconomic Stability Indonesia: Inflation and GDP Update

    The Governor of Indonesia’s central bank, Agus Martowardojo, said that he expects inflation to accelerate to 6.1 percent year-on-year (y/y) in November 2014, significantly up from 4.83 percent y/y in the previous month. Accelerated inflation is caused by the multiplier effect triggered by the recent subsidized fuel price hike in Southeast Asia’s largest economy. On 18 November 2014, the government introduced higher prices for subsidized fuels in a bid to reallocate public spending from fuel consumption to structural development.

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