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Today's Headlines US Interest Rates

  • Stocks & Rupiah Indonesia: Cautious Reaction to Federal Reserve

    Stocks & Rupiah Indonesia: Cautious Reaction to Federal Reserve

    Similar to yesterday, Indonesian stocks and the rupiah are still moving cautiously on Thursday (30/07). Supported by yesterday’s rising US stocks and today’s mostly rising stocks in the Asia-Pacific region, the benchmark Jakarta Composite Index climbed 0.22 percent in the first trading session on Thursday. However, the latest statements from the US Federal Reserve also signal that a US interest rate hike is coming closer, hence giving rise to a stronger US dollar at the expense of most global currencies and the gold price.

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  • Indonesia Stock Market Update: Extending Losses on Tuesday

    Indonesia Stock Market Update: Extending Losses on Tuesday

    Immediately after trading opened on Tuesday morning - and in line with the performance of most other Asian stock indices - Indonesian stocks extended their losses. By 10:53 am local Jakarta time, the benchmark Jakarta Composite Index had fallen 1.07 percent to 4,720.33 points, its lowest level since April 2014. The primary reason why markets have tumbled across the globe is the severe drop in the Chinese market. Yesterday, China’s Shanghai Composite Index tumbled a staggering 8.48 percent.

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  • Investor Appetite for Indonesia’s Euro-Denominated Bonds Declined

    Investor Appetite for Indonesia’s Euro-Denominated Bonds Declined

    According to data released by the Indonesian Finance Ministry, Indonesia collected 1.25 billion euro (approx. USD $1.4 billion) through the issuance of 10-year euro-denominated bonds, yielding at a discount of 3.555 percent, on Thursday (23/07). With incoming bids at 1.9 billion euros, it is clear that investor appetite for Indonesia’s euro-denominated bonds declined compared to the country’s first euro-denominated bond issuance in July 2014 (which was oversubscribed 6.7 times and could therefore carry a yield of 2.976 percent only).

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  • Indonesian Rupiah Weakens Beyond IDR 13,400 per US Dollar Level

    Indonesian Rupiah Weakens Beyond IDR 13,400 per US Dollar Level

    Again, Indonesia’s rupiah is touching the IDR 13,400 per US dollar psychological boundary. According to the Bloomberg Dollar Index, Indonesia’s currency had depreciated 0.22 percent to IDR 13,405 per US dollar at 11:22 am local Jakarta time on Thursday (23/07), a level last seen when the country was still plagued by the Asian Financial Crisis in 1998. Crossing the psychological boundary could mean Indonesia’s central bank (Bank Indonesia) will intervene again to support the currency in order to safeguard people’s confidence in the currency.

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  • Indonesian Rupiah Update: Close to IDR 13,400 per US Dollar

    Indonesian Rupiah Update: Close to IDR 13,400 per US Dollar

    According to the Bloomberg Dollar Index, the Indonesian rupiah continued to depreciate on Monday (20/07). Indonesia’s currency weakened 0.31 percent to IDR 13,395 per US dollar, its weakest level since 1998 when the country was plagued by the Asian Financial Crisis. Meanwhile, Bank Indonesia’s activities are still limited until Wednesday (22/07) due to a public holiday (Idul Fitri celebrations), implying that the central bank temporarily doesn't publish its Jakarta Interbank Spot Dollar Rate (abbreviated: JISDOR).

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  • Bank Indonesia Holds Interest Rates for 5th Straight Month in July

    Bank Indonesia Holds Interest Rates for 5th Straight Month in July

    As expected Indonesia's central bank (Bank Indonesia) refrained from adjusting its interest rate regime at Tuesday’s Board of Governor’s meeting (14/07). The key BI rate was kept at 7.50 percent, while the overnight deposit rate (Fasbi) and lending facility rate were left at 5.50 percent and 8.00 percent, respectively. Bank Indonesia believes that the current interest rate environment is in line with its efforts to bring down inflation while supporting Indonesia’s ailing rupiah ahead of expected further monetary tightening in the USA later this year.

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  • Indonesian Stocks Higher on Greece; Rupiah Weaker on Looming Fed Hike

    Indonesian Stocks Higher on Greece; Rupiah Weaker on Looming Fed Hike

    In line with the global trend, Indonesian stocks extended their gains on Tuesday morning (14/07). Most stock indices (across the globe) continue to move in green territory after debt-ridden Greece and its international creditors agreed - after a 17-hour long emergency meeting - to an austerity package that will keep Greece within the Eurozone. Indonesia’s benchmark Jakarta Composite Index (IHSG) had risen 0.60 percent to 4,923.36 points by 11:45 am local Jakarta time on Tuesday.

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  • Indonesia’s Foreign Exchange Reserve’s Continue to Decline

    Indonesia’s Foreign Exchange Reserve’s Continue to Decline

    Indonesia’s foreign exchange reserves fell USD $2.8 billion to USD $108.0 billion at the end of June 2015 (from USD $110.8 billion one month earlier). This fall was caused by foreign debt repayment and the use of foreign exchange to stabilize the rupiah exchange rate. Due to external pressures (particularly looming further monetary tightening in the USA this year and the possible Greek exit from the euro), the rupiah is the worst performing Asian currency tracked by Bloomberg so far in 2015, weakening about 7 percent against the US dollar.

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  • Economy of Indonesia: Revisions GDP Growth, Credit Growth & Rupiah

    Economy of Indonesia: Revisions GDP Growth, Credit Growth & Rupiah

    The Indonesian government revised its 2015 economic growth target. Sofyan Djalil, Indonesian Coordinating Minister for Economic Affairs, stated on Friday (03/07) that the government’s previous target was unrealistically high at 5.8 percent (y/y) given the sluggish international and domestic economic context. The government revised down the GDP growth target of 2015 to 5.2 percent (y/y). Djalil said that the global economy is forecast to grow 2.9 percent (y/y) in 2015 from an earlier estimate of 3.5 percent (y/y).

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  • Eric Sugandi: Indonesian Rupiah May Touch IDR 13,900 per US Dollar

    Eric Sugandi: Indonesian Rupiah May Touch IDR 13,900 per US Dollar

    Eric Sugandi, Chief Economist at the Standard Chartered Bank, expects Indonesia’s rupiah to have depreciated to IDR 13,900 per US dollar by the end of the year from IDR 13,339 currently (29/06) due to the impact of the bullish US dollar ahead of monetary tightening in the USA and the looming Greek exit from the Eurozone. Actually, this is a conservative prognosis. In case Indonesia’s central bank does not raise its benchmark interest rate (BI rate), currently at 7.50 percent, pressures on the rupiah may increase in fact increase further.

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Latest Columns US Interest Rates

  • US Dollar to Dictate Asian Currency Moves in 2016

    US Dollar to Dictate Asian Currency Moves in 2016

    The financial markets have had an interesting year in 2015, with several significant surprises seen in the major asset classes. On the whole, 2015 could probably be best described as a year of stabilizing with stocks and commodities holding mostly steady throughout the period. This has been largely true in the currency markets, as well. But there are some factors that are likely to influence trends for world currencies in new ways in 2016. Central banks in some regions will likely have significant influence in others, and investors will need to remain aware of the possibilities early in order to position for potential trend chances in critical areas.

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  • Indonesia's Loan Growth, Financial Literacy and US Rate Hike

    Indonesia's Loan Growth, Financial Literacy and US Rate Hike

    Global credit rating agency Moody's Investors Service expects loan growth in Indonesia to continue to slow in 2016 as sluggish economic growth curtails corporate and individual demand for funding in Southeast Asia's largest economy. Meanwhile, a survey conducted by Standard & Poor's shows that the majority of Indonesians are financially illiterate, implying that the government needs to increase efforts to educate its population. Lastly, Asian Development Bank President Takehiko Nakao is convinced that a US interest rate hike will not cause a new financial crisis in Asia. Lets zoom in a bit further on these three subjects.

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  • Bank Indonesia Remains Committed to Tight Monetary Stance

    Bank Indonesia Remains Committed to Tight Monetary Stance

    The central bank of Indonesia (Bank Indonesia) is expected to keep its benchmark interest rate (BI rate) relatively high in order to safeguard Indonesia's financial stability in 2016 (instead of seeking accelerated economic growth through a rate cut). Despite easing pressures on inflation and the country's current account balance, Bank Indonesia Governor Agus Martowardojo said that persistent global uncertainty (referring to the looming US Fed Fund Rate hike and China's slowdown) justifies the tight monetary stance.

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  • Indonesia Stock Market & Rupiah Update: US Payrolls & Rate Hike Expectations Surge

    Indonesia Stock Market & Rupiah Update: US Payrolls & Rate Hike Expectations Surge

    Indonesian assets weakened on Friday (06/11) on expectation that US non-farm payrolls and US employment data would improve, suggesting that a Fed Fund Rate hike may occur in December 2015. Such expectations were correct. After Indonesian and other Asian markets had closed on Friday, the US Labor Department announced that October payrolls rose 271,000 (the largest increase this year), while the US unemployment rate touched a seven-year low at 5 percent. Furthermore, the average hourly earnings over the past 12 months climbed by the most since 2009.

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  • Does Bank Indonesia Have Room to Cut its Key Interest Rate?

    Does Bank Indonesia Have Room to Cut its Key Interest Rate?

    As Indonesia's inflation rate has eased to 6.25 percent (y/y) in October 2015 from 6.83 percent (y/y) in the previous month, and given that Indonesian inflation will ease more markedly in the last two months of 2015 as the impact of the subsidized fuel price hike in November 2014 will vanish, the central bank of Indonesia (Bank Indonesia) seems to have more scope to cut its current relatively high benchmark interest rate, hence giving rise to accelerated economic activity.

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  • World Bank Releases October 2015 Indonesia Economic Quarterly

    World Bank Releases October 2015 Indonesia Economic Quarterly

    Today (22/10), the World Bank released the October 2015 edition of its flagship Indonesia Economic Quarterly, titled "In Times of Global Volatility". In the report the World Bank states that despite current ongoing global uncertainties (caused by looming monetary tightening in the USA and China's economic slowdown), which make macroeconomic management difficult in the year ahead, pro-active government action could offset the negative impact and may help to boost growth.

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  • Weak US Employment Data Means No Fed Rate Hike in 2015?

     Weak US Employment Data Means No Fed Rate Hike in 2015?

    After the release of US non-farm payrolls on Friday (02/10) markets are starting to doubt whether the Federal Reserve has room to raise its key Fed Fund Rate at all in 2015. In September a total of 142,000 jobs were added to the US economy, well below the market consensus of 201,000. Moreover, August non-farm payrolls were revised down to 136,000 (from 173,000 initially). It was the first time since mid-2013 that US jobs grew at such a slow pace in two consecutive months. So far in 2015 US non-farm payrolls grew at an average of 198,000 per month, significantly down from the average growth pace of 260,000 per month last year.

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  • Bank Indonesia Press Release: BI Rate Held at 7.50% in September

    Bank Indonesia Press Release: BI Rate Held at 7.50% in September

    The central bank of Indonesia announced on Thursday (17/09) that it the country’s key interest rate (BI rate) at 7.50 percent, while maintaining the deposit facility rate at 5.50 percent and the lending facility rate at 8.00 percent. According to Bank Indonesia (BI) this decision is consistent with its efforts to push inflation towards the target corridor of 4±1 percent in both 2015 and 2016. In addition, the decision is also part of Bank Indonesia’s measures to anticipate possibilities of a Fed Fund Rate (FFR) hike.

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  • Market Update: Why Indonesian Stocks & Rupiah Strengthen on Friday?

    Market Update: Why Indonesian Stocks & Rupiah Strengthen on Friday?

    After a real roller coaster ride, Indonesia’s benchmark stock index (Jakarta Composite Index) climbed 0.35 percent to 4,446.20 points at the end of the trading week. The majority of key stock indices across the globe tended to strengthen on Friday after a week characterized by severe volatility amid concern about the economic situation in China.

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  • Press Release Bank Indonesia: BI Rate Held at 7.50% in August 2015

    Press Release Bank Indonesia: BI Rate Held at 7.50% in August 2015

    During Bank Indonesia’s Board of Governors it was decided on 18th August 2015 to hold the BI Rate at 7.50 percent, while maintaining the Deposit Facility rate at 5.50 percent and the Lending Facility rate at 8.00 percent. The decision is consonant with efforts to control inflation within the target corridor of 4±1 percent in 2015 and 2016. In the short term, Bank Indonesia (BI) is focused on efforts to stabilize the rupiah amid uncertainty in the global economy, by optimizing monetary operations in the rupiah and the foreign exchange market.

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