The Indonesian rupiah exchange rate strengthened slightly on the last trading day of the week. On Friday (08/08), Indonesia’s currency appreciated 0.15 percent to IDR 11,779 per US dollar according to the Bloomberg Dollar Index. Most Asian currencies and stocks fell, while prices of gold and oil jumped, after US President Barack Obama agreed to air strikes in northern Iraq (aimed at Sunni extremist militants). In combination with continued tensions in Ukraine as well as Gaza, investors opt for risk aversion (and profit taking).

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Amid falling stocks and government bonds, the Indonesian rupiah exchange rate depreciated 0.45% to IDR 11,751 per US dollar according to the Bloomberg Dollar Index on Wednesday (06/08). This weak performance is caused by recent solid economic data from the USA, while tensions in the Ukraine are increasing (causing investors to prefer to invest in safe havens) after Russian President Vladimir Putin ordered a response to sanctions. Meanwhile, the euro lost ground to the US dollar after Germany posted unexpected declining factory orders.

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Despite the release of slowing Q2-2014 GDP growth as well as the June 2014 trade deficit, the Indonesian rupiah exchange rate appreciated 0.53 percent to IDR 11,698 against the US dollar according to the Bloomberg Dollar Index on Tuesday (05/08). This performance of Indonesia’s currency is in line with the performance of other emerging Asian currencies on today’s trading day. The US dollar weakened against almost all these currencies as lower US yields made investors decide to search for higher returns in Asia.

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Although the Indonesia stock exchange as well as most businesses are still closed on Friday (01/08) amid Idul Fitri celebrations, trading in the Indonesian rupiah resumed after a four-day holiday. Impacted by developments in the USA, the Indonesian rupiah exchange rate had depreciated 1.82 percent to IDR 11,791 per US dollar by 12:25 pm local Jakarta time (based on Bloomberg Index). Asian currencies are heading for the largest weekly decline since June 2014 after US economic data indicate improved economic recovery of the USA.

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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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After a worrying trade deficit of USD $1.96 billion in April 2014, the trade balance of Indonesia swung back into a surplus in May 2014. On Tuesday (01/07), Indonesia’s Central Statistics Agency (BPS) announced that the May trade surplus was USD $69.9 million. The country’s exports rose 3.73 percent (month-on-month) to USD $14.83 billion, while imports fell 9.23 percent (month-on-month) to USD $14.76 billion in May. However, in the first five months of 2014 Indonesia still recorded a trade deficit of USD $0.82 billion.

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The Indonesian rupiah exchange rate came close to the IDR 12,000 per US dollar mark on Wednesday (18/06). Based on the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.87 percent to IDR 11,997 per US dollar. Bank Indonesia stated that the weakening is due to violence in northern Iraq (giving rise to a higher oil price which subsequently pressures the financial balance sheets of countries that import oil, such as Indonesia), and concern about results of the Federal Reserve meeting (17-18 June 2014).

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The Indonesian rupiah exchange rate had depreciated 0.20 percent to IDR 11,819 per US dollar by 15:30pm local Jakarta time based on the Bloomberg Dollar Index. This performance is in line with the performance of other emerging currencies in Asia, which all tend to weaken against today’s strengthening US dollar. One of the factors that pressures on the rupiah is the geopolitical tensions in Iraq which have resulted in a rising oil price (last week the oil price rose by 4.5 percent).

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The Indonesian rupiah exchange rate has appreciated 0.50 percent to IDR 11,779 per US dollar by 16:00pm local Jakarta time on Monday (09/06). This performance is in line with the general trend in Asia where emerging market currencies strengthened against the greenback on today’s trading day. The rupiah is among today’s best-performing emerging currencies as it was boosted by the higher trade surplus of China (one of Indonesia’s most important trading partners) and economic growth in Japan.

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Both the Indonesian rupiah exchange rate and the country's benchmark stock index (known as the Jakarta Composite Index or IHSG) have strengthened significantly on Wednesday's trading day (14/05). The rupiah appreciated 0.76 percent to IDR 11,450 per US dollar by 15:00 local Jakarta time according to the Bloomberg Dollar Index. Meanwhile, the IHSG gained 1.09 percent to 4,975.13 by the same time. Main reason for this strong performance is the official declaration of the PDI-P to form a coalition with NasDem and PKB.

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The Indonesian rupiah exchange rate appreciated 0.14 percent to IDR 11,581 per US dollar on Wednesday based on the Bloomberg Dollar Index. The currency is now at its strongest level since 25 November 2013 as it regained trust of international investors. In 2013, the rupiah weakened sharply after speculation emerged that the Federal Reserve would scale back its quantitative easing program. In combination with the country's record high current account deficit and high inflation it led to large capital outflows from Southeast Asia's largest economy.

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Although the gap on 4,575-4,579 was closed, Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) was given limited room to go up further as the performance of global stock indices did not support a bigger rebound. On the contrary, despite the 0.37 percent rise of the IHSG to 4,601.28 points on Tuesday (04/03), there are still pressures that may push the index down in the days ahead. Amid the political conflict in the Ukraine, Wall Street fell on Monday (03/03), which led to profit taking in the first trading session.

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The Indonesian rupiah exchange rate had depreciated (0.15 percent) to IDR 11,665 per US dollar on Thursday (27/02), 15:00 local Jakarta time, based on the Bloomberg Dollar Index. Governor of Bank Indonesia Agus Martowardojo stated yesterday to expect the currency to stabilize near current levels in line with its economic fundamentals ahead of looming further Federal Reserve tapering. Analysts estimate that Indonesia's trade balance might deteriorate in January 2014 as the impact of the mineral-ore export ban kicks in.

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The Indonesian rupiah exchange rate continued its recent appreciating trend on Monday (17/02). Based on the Bloomberg Dollar Index, the currency strengthened 0.39 percent to IDR 11,785 per US dollar at 16:00 local Jakarta time. Main reason for this renewed confidence in the rupiah is Indonesia's current account deficit, which eased significantly by the end of 2013. According to Bank Indonesia, the deficit eased from 4.4 percent of gross domestic product (GDP) in the second quarter of 2013 to 1.98 percent of GDP in Q4-2013.

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Despite the release of positive macroeconomic data on Monday (03/02), Indonesia's rupiah exchange rate depreciated 0.22 percent to IDR 12,240 per US dollar based on the Bloomberg Dollar Index. China’s Manufacturing PMI fell to a six-month low of 50.5 in January and put pressure on stocks and currencies in emerging markets. Moreover, the Federal Reserve's further reduction of its quantitative easing program (to USD $65 billion per month) continues to strengthen the US dollar at the expense of emerging currencies.

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In the Bloomberg Dollar Index, Indonesia's rupiah exchange rate depreciated 0.47 percent to IDR 12,238 per US dollar on Monday (27/01). The decline of the rupiah was in line with today's trend of weakening Asia Pacific currencies (against the US dollar). Meanwhile, the central bank's mid rate (the Jakarta Interbank Spot Dollar Rate or JISDOR) depreciated 0.17 percent to IDR 12,198 per US dollar. Market participants are concerned about Indonesia's January 2014 inflation and further Federal Reserve tapering.

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In the fourth week of January, Bank Indonesia's rupiah exchange rate (the Jakarta Interbank Spot Dollar Rate or JISDOR) depreciated 0.41 percent against the US dollar. This weakening trend of the rupiah was caused by various factors. Most importantly, the US dollar has been gaining strength against emerging currencies, including Indonesia, as speculation emerged that the Federal Reserve will curtail its massive monthly bond-buying program (quantitative easing) by more than just USD $10 billion per month.

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The Indonesia rupiah exchange rate depreciated 0.13 percent to IDR 12,181 per US dollar based on the Bloomberg Dollar Index on Friday (24/01). Asian currencies felt the impact of a contraction of Chinese manufacturing as HSBC’s preliminary Purchasing Managers’ Index slipped to 49.6 in January 2014. Meanwhile, US existing homes sales in December were best since 2006 while US jobless claims were near a six-week low. These data fuel speculation that the Fed will continue to wind down its bond-buying program.

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The Indonesia rupiah exchange rate depreciated 0.18 percent to IDR 12,165 at 16.30 local Jakarta time on Thursday (23/01), based on the Bloomberg Dollar Index. Main reason for this decline is concern that Indonesia's central bank (Bank Indonesia) will maintain its benchmark interest rate (BI rate) at 7.50 percent despite an expected increase in January inflation due to massive floods as well as higher industrial electricity and LPG prices. Indonesia's January inflation rate is estimated to be around 1 percent.

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Based on the Bloomberg Dollar Index, the Indonesia rupiah exchange rate had depreciated 0.18 percent to IDR 12,113 per US dollar at 14:45 local Jakarta time on Monday (20/01). The most important factor that caused this negative performance was China's slowing economic growth in quarter IV-2013. In the fourth quarter of 2013, China's GDP grew 7.7 percent, down from 7.8 percent in the previous quarter. This slowing growth indicates that China's economic 'recovery' is still fragile (China is among the five most important trade partners of Indonesia).

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