Today, Bank Indonesia will start its February two-day policy meeting. Markets are eagerly awaiting whether the central bank of Indonesia will indeed cut its key interest rate (BI rate) again. Last month, it had cut the BI rate by 0.25 percent to 7.25 percent as inflation, the current account deficit and the rupiah rate were all under control. Although the rate cut was welcomed by the business community it was considered not enough to push borrowing costs lower in Southeast Asia's largest economy hence unable to boost economic activity significantly.

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The Indonesian rupiah is appreciating markedly on Wednesday (10/02). By 12:30 pm local Jakarta time, Indonesia's currency had appreciated 1.62 percent to IDR 13,391 per US dollar based on the Bloomberg Dollar Index, a three-month high. Today, most emerging currencies in Asia are appreciating against the US dollar ahead of Fed Chair Janet Yellen's testimony in US Congress this week. Other factors that support strong rupiah appreciation are speculation that Indonesia will attract investors due to accelerating domestic economic growth and the move of Japan's central bank to introduce negative interest rates.

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The Indonesian rupiah has been under pressure so far today (03/02) on concern that falling oil prices drag down other commodity prices, hence negatively affecting Indonesia's export performance. Yesterday, a global selloff in stocks occurred as oil prices were again touching the USD $30 per barrel mark. Emerging market currencies too are under pressure. The Indonesian rupiah had depreciated 0.79 percent to IDR 13,799 per US dollar (Bloomberg Dollar Index) by 12:55 pm local Jakarta time.

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Asian stocks were mixed on Monday (01/02). However, Indonesia's benchmark Jakarta Composite Index rose 0.21 percent to 4,624.63 points after a volatile trading day (one hour before trading closed, the index was down more than one percent). Furthermore, the Indonesian rupiah appreciated markedly, while there occurred inflows into bonds. It seems that Japan's surprise move to introduce negative interest rates managed to offset the negative impact of weak manufacturing activity in China and falling crude oil prices.

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Contrary to expectations, Indonesian stocks and the rupiah had a weak start of the new year. On Monday (04/01) Indonesia's benchmark Jakarta Composite Index fell 1.46 percent to 4,525.92 points, while the Indonesian rupiah depreciated 0.82 percent to IDR 13,943 per US dollar (Bloomberg Dollar Index). The performance of Indonesian stocks is in line with the performance of stocks around the globe. In China stock trading was even halted twice due to its plunging index. What happened today?

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The Indonesian rupiah continued its remarkable rally on Tuesday (22/12). The currency had appreciated 0.98 percent to IDR 13,672 per US dollar by 11:10 am local Jakarta time (Bloomberg Dollar Index). The rupiah has recovered from a recent low of IDR 14,123 on Monday 14 December to IDR 13,672 per US dollar, a 3.2 percentage point advance in about one week. There are several matters that explain this remarkable performance.

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The Indonesian rupiah is strengthening remarkably against the US dollar on Monday (21/12) despite expectation that the rupiah will become the worst-performing Asian currency in 2016 on capital outflows (amid more US interest rate hikes planned for 2016), Indonesia's falling foreign exchange reserves, and persistent low commodity prices. Based on the Bloomberg Dollar Index the Indonesian rupiah had appreciated 1.13 percent to IDR 13,760 per US dollar by 14:20 pm local Jakarta time on Monday (21/12).

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Stock indices in Southeast Asia plunged on Friday (18/12), led by benchmark indices in Thailand and Indonesia. These Asian markets followed the global correction that occurred after investors weighed in the possible impact of the Federal Reserve's interest rate hike. US and European stocks dropped on Thursday and Friday, while prices of oil and other commodities continued to slide. Indonesia's Jakarta Composite Index fell 1.92 percent to 4,468.65 points.

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After the rally on Thursday (responding positively to the Federal Reserve's announcement to raise its Fed Fund Rate), Indonesian assets are weakening on Friday (18/12) while most other Asian markets are down. Indonesia's benchmark Jakarta Composite Index was down 1.20 percent to 4,501.34 points by 09:45 am local Jakarta time, while the Indonesian rupiah had depreciated 0.22 percent to IDR 14,040 per US dollar (Bloomberg Dollar Index). As such, Indonesian stocks are following the example of US stocks that plunged overnight.

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Indonesian stocks and the rupiah responded highly positive to the decision of the US Federal Reserve to raise its key Fed Fund Rate by 25 basis points on Wednesday (16/12). Indonesia's benchmark stock index (Jakarta Composite Index) soared 1.62 percent to 4,555.96 points, while the rupiah appreciated 0.44 percent to IDR 14,009 per US dollar. Not only in Indonesia but also globally stocks thrived on the ending of prolonged uncertainty about the timing of the US interest rate hike.

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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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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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The Indonesian rupiah exchange rate depreciated considerably on Wednesday (25/06) after Indonesia’s central bank (Bank Indonesia) said it would allow rupiah depreciation in an attempt to boost competitiveness of the country’s exports, while curbing imports. This strategy will have a positive impact on the country’s troubled trade balance. Based on the Bloomberg Dollar Index, the currency had weakened 0.67 percent to IDR 12,070 per US dollar by 14:30pm local Jakarta time.

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The Indonesia rupiah exchange rate depreciated 0.16 percent to IDR 11,992 per US dollar on Monday (23/06) according to the Bloomberg Dollar Index, thus extending the currency’s recent depreciating trend. Meanwhile, Bank Indonesia's benchmark rupiah rate (known as the Jakarta Interbank Spot Dollar Rate, or, abbreviated JISDOR) depreciated 0.03 percent to IDR 11,971 against the greenback. What were the factors that influenced the rupiah’s performance today?

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After the Indonesian rupiah exchange rate temporarily surpassed the psychological boundary of IDR 12,000 per US dollar on Wednesday (18/06), concerns about the fundamentals of the currency emerged. The currency has been under pressure recently due to external factors (monetary policy of the Federal Reserve and geopolitical tensions in Iraq) and domestic factors (large private debt, significant US dollar demand, the wide trade deficit and political uncertainty ahead of the presidential election).

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The Indonesian rupiah exchange rate depreciated 0.62 percent to IDR 11,893 per US dollar on Tuesday (17/06), a four-month low. The main reason behind this poor performance is increased concern about the impact of violence in northern Iraq - namely higher global oil prices - on Indonesia’s trade and budget deficits as Indonesia subsidises a significant amount of domestic fuels). As oil and gas imports accounted for about 23 percent of total imports of Indonesia in April 2014.

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As the market already expected that Indonesia’s benchmark interest rate (BI rate) would be kept at 7.50 percent in June 2014, the Indonesian rupiah exchange rate did not undergo any significant fluctuations on Friday’s trading day. Based on the Bloomberg Dollar Index, the currency had depreciated 0.05 percent to IDR 11,796 per US dollar by 16:25pm local Jakarta time. The US dollar had to cope with some pressures due to US retail sales (rising only +0.3 percent in May 2014) and weaker US jobless claims data.

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The Indonesian rupiah exchange rate appreciated slightly on Wednesday (11/06). According to the Bloomberg Dollar Index, the currency of Southeast Asia’s largest economy appreciated 0.04 percent to IDR 11,810 per US dollar. Reuters reported that the euro zone's monetary easing in combination with the recent improvement in China's economy offset the impact of higher US yields on Asia. However, investors are still waiting for several data, including the BI interest rate, the Eurozone’s industrial production, and US retail sales.

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The Indonesian rupiah exchange rate appreciated 0.25 percent to IDR 11,860 per US dollar according to the Bloomberg Dollar Index on Thursday (05/06). However, this is not expected to be the start of an appreciating trend for the currency as there are still various domestic and international factors that place pressure on the rupiah. Contrary to the Bloomberg Index, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.54 percent to IDR 11,874 against the US dollar today.

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