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).

Read more ›

Head of the International Monetary Fund (IMF) Christine Lagarde stated on Sunday (06/07) that the institution expects improved global economic growth in the second half of 2014 as well as in 2015 supported by the assumption that China, the world’s second-largest economy, will expand between 7.0 and 7.5 percent in 2014, thus not showing a sharp slowdown. Later this month, the IMF will release its new global economic outlook. Lagarde said that forecasts will be slightly different from forecasts made in the April edition.

Read more ›

Finance Minister of Indonesia, Chatib Basri, expects the Indonesian economy to grow 5.3 percent (year-on-year, yoy) in the second quarter of 2014 because of improved household consumption supported by the legislative and presidential elections in 2014. Meanwhile, Indonesian exports are also expected to have improved slightly from its performance in the first quarter of the year due to improved economic conditions in Europe. However, demand from China and Japan remained sluggish. In Q1-2014, GDP growth slowed to 5.21 percent (yoy).

Read more ›

The Indonesian government is optimistic that the country’s economic growth will accelerate to 5.8 percent (year-on-year) in 2015 from an expected growth pace of 5.5 percent in 2014. The key to next year’s improved gross domestic product (GDP) growth of Indonesia is the higher forecast for global economic growth. In 2015, the world economy is estimated to grow 3.9% (yoy), higher than the outlook for this year’s growth at 3.6 percent. As such, the government’s outlook is in line the central bank’s GDP growth forecast in the range of 5.4 to 5.8 percent.

Read more ›

The World Bank cut its global economic growth forecast because of the weaker outlooks for the economies of the USA, Russia and China, as well as the geopolitical tensions between Russia and Ukraine which triggered worldwide concerns. The Washington-based institution expects to see 2.8 percent of global economic growth in 2014, far below its January 2014 estimate of 3.2 percent. However, it kept its global growth forecasts for the next two years at 3.4 percent and 3.5 percent, respectively.

Read more ›

According to the World Bank, China’s economic growth will moderate over the medium term as the country’s economy rebalances gradually. In 2014, GDP growth is expected to slow to 7.6 percent (year-on-year/yoy), and declining further to 7.5 percent (yoy) in 2015. The World Bank’s latest China Economic Update mentions: “The slowdown in the first quarter reflected a combination of dissipating effects of earlier measures to support economic expansion, a weak external environment, and tighter credit, especially for real estate.”

Read more ›

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.

Read more ›

The central bank of Indonesia (Bank Indonesia) expects to see a trade deficit in the month of April 2014 due to a significant increase of imports (around 11 percent month-to-month), while prices of a number of important export commodities have been under pressure (including coal and crude palm oil). Governor of Bank Indonesia Agus Martowardojo said that weak demand from China impacts negatively on the trade balance. Bank Indonesia's statement contradicts the institution's earlier statement which hinted at a surplus of USD $600 million in April.

Read more ›

The start of the ASEAN Economic Community (AEC) in 2015 will turn the ASEAN region into a strong economic block. However, the region should enhance political stability and foster economic justice. These are the two basic conclusions drawn in the World Economic Forum on East Asia in Manila (the Philippines) on Thursday (22/05). This forum is a meeting place for state leaders, global businesses, politicians as well as scholars. Indonesian President Susilo Bambang Yudhoyono was one of the attendees.

Read more ›

An official at Indonesia's Ministry of Energy and Mineral Resources stated that the production of coal in the first four months of 2014 grew five percent (year-on-year) to 147 million tons. As such, the country is still on track to meet this year's coal production target of 426 million tons. Exports of Indonesian coal totaled 109 million tons in the January-April 2014 period, while the remainder (38 million tons) was sold on the domestic market. Indonesia, Southeast Asia's largest economy, is one of the world's largest producers and exporters of coal.

Read more ›

During most of the day, Indonesia's benchmark stock index (the Jakarta Composite Index or IHSG) moved in the green zone, seemingly unaffected by falling indices on Wall Street on Wednesday (26/03). However, just before the trading day closed  market participants engaged in profit taking causing the 0.11 percent decline of the IHSG to 4,723.06 points. It is difficult to pinpoint the exact reason for this occurrence. Perhaps because Asian indices turned mixed after China's benchmark index fell as China's latest industrial profit growth data were weak.

Read more ›

On Wednesday (26/03), most emerging Asian currencies appreciated against the US dollar as the region's shares hit a two-week high on upbeat US economic data in combination with reduced concern over the crisis in Crimea (Ukraine). However, the Indonesian rupiah exchange rate was one of the exceptions to this trend on today's trading day. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.16 percent to IDR 11,412 at 16:15 local Jakarta time. Meanwhile, the Chinese yuan recovered some of its earlier losses.

Read more ›

Despite technical indicators suggesting further upward movement of Indonesia's benchmark stock index (known as the Jakarta Composite Index or IHSG), a positive performance of the index was blocked by external factors. Several Asian stock indices were down responding to Markit's lower US manufacturing PMI (slipping to 55.5 from 57.1 in February 2014). Similarly, China and the Eurozone's manufacturing data showed slowing growth. Continued appreciation of the rupiah exchange rate managed to limit the decline of the IHSG.

Read more ›

At the start of the new week, Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) was able to continue to climb, supported by positive Asian indices. Today, investors took advantage of discounted stocks in Asia as markets had fallen after the Federal Reserve's announcement last week that the quantitative easing program would be wound down further as well as a possible US interest rate hike in 2015 and 2016. However, the IHSG was also vulnerable to profit taking. Therefore, today's gain was limited.

Read more ›

Coal is one of the most important commodities for Indonesia in terms of state revenue as it accounts for about 85 percent of the country's total mining revenue. Therefore, when global coal prices fell sharply from 2011 (amid a slowing global economy), Indonesia felt the impact. In a response to lower coal prices, Indonesian miners actually increased coal output thus placing more downward pressure on coal prices and profit margins. Although the coal industry will remain frail for some time to come, long-term prospects are still strong.

Read more ›

Although we advise investors to remain careful as any negative sentiment will be used as a valid reason for profit taking, Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) was up from the start of the trading day on Tuesday (11/03). The start of dividend payouts helped to offset concerns about possible interest rate hikes (in emerging markets) as well as the impact of weak indices on Wall Street and Europe on Monday (10/03). Asian stock indices, however, were positive on Tuesday, thus providing support for the IHSG.

Read more ›

Coordinating Minister for Economic Affairs Hatta Rajasa said that the rupiah exchange rate's new equilibrium is at IDR 11,000 per US dollar. As the economic fundamentals of Indonesia's economy have improved in recent months - evidenced by the easing current account deficit and inflation - the rupiah has shown a strong performance, appreciating around six percent against the US dollar in 2014 (year to date). In fact, Rajasa warned that the rupiah should not strengthen too much as this impacts negatively on Indonesia's trade balance.

Read more ›

Although immediately plunging 0.33 percent to IDR 11,478 per US dollar after its opening on Monday (10/03), the Indonesian rupiah exchange rate had appreciated 0.57 percent to IDR 11,375 per US dollar by 14:00 local Jakarta time (Bloomberg Dollar Index). The rupiah's performance today is in sharp contrast with other Asian currencies. As US nonfarm payrolls increased more than expected and Chinese exports fell sharply (18.1 percent year-on-year) in February 2014, the US dollar appreciated against most Asian currencies.

Read more ›

Rising indices on Wall Street on Tuesday (04/03) impacted positively on Asian indices the following day, including Indonesia's benchmark stock index (known as the Jakarta Composite Index or IHSG). As the political tensions in Ukraine have somewhat eased since Russian President Vladimir Putin said that Russia was not seeking to escalate the conflict, investors were again eager to invest in emerging market stocks; foreign investors were net buyers. Today's performance of the IHSG left a gap at 4,602-4,621 points.

Read more ›

Yesterday (26/02) strengthening Asian stock indices were unable to push the benchmark index of Indonesia (Jakarta Composite Index/IHSG) into the green zone. Today (Thursday 27 February), we witnessed the contrary: the IHSG climbed 0.80 percent to 4,568.94 points, while Asian indices were mixed. Indices in China, the Sensex and the Nikkei fell, while others rose. Those that rose responded positively toward the release of higher sales of new US single-family homes. However, the conflict in the Ukraine limited their growth.

Read more ›