Although influence of the devaluation of China’s yuan has eased, the Indonesian rupiah remains under pressure as investors are waiting for results of Bank Indonesia’s Board of Governor’s meeting (to be held later today), low oil (and other commodity) prices, while the US dollar appreciates against most other currencies amid mixed US macroeconomic data. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.12 percent to IDR 13,838 per US dollar by 10:30 am local Jakarta time on Tuesday (18/08).

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Today (14/08) the central bank of China let the yuan appreciate 0.05 percent against the US dollar, effectively ending three consecutive days of devaluation. The People's Bank of China (PBoC) also pledged to safeguard a stable yuan after the sharp devaluation had triggered significant volatility on international financial markets. For example, Indonesian assets (stocks and the rupiah) tumbled severely on Tuesday and Wednesday amid yuan devaluation (and looming higher interest rates in the USA).

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For the third straight day China allowed its currency to weaken against the US dollar. On Thursday (13/08) the yuan depreciated 0.7 percent against the greenback, signalling that China’s central bank may let the yuan weaken further in a controlled manner. Yesterday, just before trading closed, it actually intervened to support the currency as the yuan depreciated nearly two percent (the daily limit). The move of China to devalue the yuan is a step toward liberalization and also boosts the country’s sluggish export performance.

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The fall of Indonesian stocks and the rupiah on Wednesday (12/08) is much more severe than had previously been expected. By 11:14 am local Jakarta time, the benchmark Jakarta Composite Index had fallen 3.12 percent to 4,478.56 points, while the rupiah had depreciated 1.75 percent to IDR 13,845 per US dollar according to the Bloomberg Dollar Index. Across Asia, emerging markets are badly affected (for a second straight day) by China’s decision to devalue its yuan. The yuan is now at its weakest level since October 2012.

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The Indonesian rupiah continues to depreciate on Tuesday (11/08). By 11:16 am local Jakarta time, the rupiah had depreciated 0.14 percent to IDR 13,570 per US dollar according to the Bloomberg Dollar Index. Indonesia’s currency has been touching 17-year lows due to bullish US dollar momentum ahead of looming higher US interest rates. Today, the US dollar received additional strength as China allowed its currency to weaken to a three-year low, dragging down other currencies in the Asian region.

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Stock markets in Asia are mixed on Monday (10/08) with Indonesian stocks heading downwards. In the first trading session, Indonesia’s benchmark stock market (Jakarta Composite Index) fell 0.99 percent to 4,723.19 points on weak trade data from China and positive labor data from the USA. Meanwhile, Indonesia’s rupiah is moving sideways. At 13:12 pm local Jakarta time, the rupiah was still at IDR 13,541 per US dollar according to the Bloomberg Dollar Index, unchanged since the opening this morning.

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The Indonesian rupiah continued to depreciate on Friday (07/08). Based on the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.09 percent to IDR 13,541 per US dollar on the last trading day of the week. As such, the rupiah continued to flirt with a 17-year low. With US nonfarm payrolls expected to improve at a steady pace, implying that an US interest rate hike may come sooner than later, the US dollar’s bullish momentum persisted. Meanwhile, Indonesia’s foreign exchange reserves fell by USD $40 million in July.

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Once again, the Indonesian rupiah depreciated beyond the IDR 13,500 per US dollar level on Wednesday (05/08), touching its weakest level since the Asian Financial Crisis (which began as a financial crisis but would soon develop into a deep economic, political and social crisis in Indonesia) in 1997-1998. For some Indonesian policy makers, business players and investors the current weak rupiah therefore brings back bad memories. However, there are significant changes between conditions now and those in 1997-1998.

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There are still persistent external and internal factors that make it difficult for Indonesian stocks to rise. By 12:07 am local Jakarta time, Indonesia’s benchmark stock index (Jakarta Composite Index) was down 0.25 percent to 4,788.37 points. Meanwhile, the rupiah had appreciated 0.36 percent to IDR 13,462 per US dollar by the same time according to the Bloomberg Dollar Index. What are the external (foreign) and internal (domestic) factors that influence the performance of Indonesian assets on today’s trading day (04/08)?

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In line with the general trend in Southeast Asia, Indonesian stocks traded mostly higher on the last trading day of the week. Despite not-so-good H1-2015 corporate earnings reports from the larger listed Indonesian companies, the benchmark Jakarta Composite Index was up 1.33 percent to 4,775.10 points in the first trading session on Friday (31/07). According to market watchers, Indonesia’s index is experiencing a technical rebound after falling earlier this week. However, the index is still on track to post its second straight monthly decline.

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The Indonesian rupiah exchange rate depreciated 0.67 percent to IDR 11,665 per US dollar on Monday (14/07) according to the Bloomberg Dollar Index. Meanwhile, the benchmark stock exchange of Indonesia (Jakarta Composite Index) declined 0.23 percent to 5,021.06 points. The main reason for weakening markets in Indonesia is investors’ wait & see attitude ahead of the official result of Indonesia’s presidential election. On 22 July 2014, the General Elections Commission (KPU) will announce the winner of the election.

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Initially we were concerned that Indonesia’s benchmark stock index (Jakarta Composite Index) would experience a sudden change of direction - after two days of strong gains at the start of the week - because the preliminary results of the 2014 Indonesian presidential election (based on unofficial quick counts) was mixed at first glance and thus triggers political uncertainty (something which is seriously disliked by investors). However, the index performed remarkably well and rose 1.46 percent to 5,098.11 points on Thursday (10/07).

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On Tuesday (08/07), both the Indonesian rupiah exchange rate and stocks continued where they left off yesterday. Supported by optimistic market participants speculating on a Joko Widodo victory in Wednesday’s presidential election, the rupiah appreciated 0.74 percent to IDR 11,626 per US dollar based on the Bloomberg Dollar Index, while the country’s benchmark stock index (Jakarta Composite Index) rose 0.72 percent to 5,024.71 points, surpassing the psychological level at 5,000 and approaching its record high level at 5,215 (21 March 2013).

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Although Asian stock indices tended to decline on Monday’s trading day (07/07) due to profit taking amid expectation that corporate earnings in the first half of 2014 are disappointing, the benchmark stock index of Indonesia (known as Jakarta Composite Index or IHSG) performed remarkably well as foreign investors recorded net buying and the Indonesian rupiah exchange rate appreciated sharply. The main reason why markets were positive in Indonesia on Monday was the strong performance of Joko Widodo in Saturday’s presidential debate.

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The Indonesian rupiah exchange rate appreciated sharply on Monday (07/07) due to the strong performance of presidential candidate Joko Widodo (Jokowi) in the presidential debate with rival candidate Prabowo Subianto last Saturday evening. Indonesian media declared Jokowi the winner of the debate because of his confident, eloquent and well-structured performance. This debate, in which the candidates were joined by their running mates, was the fifth and final one ahead of the presidential election on Wednesday 9 July.

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Emerging currencies in Asia, led by the Indonesian rupiah exchange rate, strengthened in the past week on positive economic data from the US and China, the world’s two largest economies. Companies in the US added more jobs than expected in June 2014, while manufacturing in China grew at its fastest pace in 2014. Improving economies of the US and China are important for Asian countries as it boosts Asian exports. Moreover, Indonesian inflation and trade data contributed to positive market sentiments.

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The Indonesian rupiah exchange rate depreciated slightly on Thursday (03/07). The US dollar gained as markets reacted to Wednesday’s ADP nonfarm payrolls report which showed that 281,000 jobs were added in the US private sector in June 2014, thus exceeding expectations. Furthermore, the market is optimistic that US employment data, released later today, will be positive too. According to the Bloomberg Dollar Index, the currency of Indonesia depreciated 0.04 percent to IDR 11,918 per US dollar.

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Although the benchmark stock index of Indonesia (known as Jakarta Composite Index or IHSG) was in the red zone prior to the release of Indonesia’s June inflation figure and May trade data, at the end of the day it finished slightly in the green zone. The IHSG climbed 0.13 percent to 4,884.83 points. The macroeconomic data that were released were positive and made market participants engage in stock trading. Moreover, the index was supported by Asian stock markets that were mostly up as well as the appreciating rupiah exchange rate.

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The Indonesian rupiah exchange rate is appreciating sharply on Monday (30/06). By 15:13pm local Jakarta time, the currency of Indonesia had strengthened 1.31 percent to IDR 11,838 against the US dollar. Main factors that cause this performance are the weakening US dollar (as a slowdown in the US economic recovery evokes expectations that the Fed Rate will not be raised soon) and falling oil prices; the US benchmark West Texas Intermediate declined 30 cents to USD $105.44 in mid-morning trade while Brent crude fell 22 cents to USD $113.08.

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The Indonesian rupiah exchange rate depreciated 0.07 percent to IDR 12,099 per US dollar on Thursday (26/06) based on the Bloomberg Dollar Index, thus extending its recent weakening trend. This trend is expected to continue further as Bank Indonesia said it would allow rupiah depreciation in order to make the country’s exports more competitive (in an attempt to curb the current account deficit). However, this also dampens demand for Indonesian bonds. The 10-year yield rose to the highest level since February 2014.

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