The coal price will have serious difficulty to rise as long as crude oil prices remain low and China's economy remains in slowdown-mode. Weak global oil prices (expected to remain below USD $40 per barrel this month) - and the strong US dollar amid looming US monetary tightening - give a bad signal to other commodities, including coal, while the world's largest energy consumer China is struggling to combat its economic slowdown implying limited global coal demand.

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Asian stock indices - including Indonesia's benchmark Jakarta Composite Index which reopened after a market holiday - were mostly in red territory on Thursday (10/12) as investors are cautious ahead of the looming US interest rate hike, expected to be decided upon at the Federal Reserve's next policy meeting (15-16 December), as well as low oil prices and falling US stocks overnight. Moreover, the central bank of China allowed its yuan to depreciate further (to a near four-month low), hence resulting in the resurgence of some fears of a currency war in Asia.

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The Indonesian rupiah is again flirting with the IDR 13,900 per US dollar level after the central bank announced on Monday (07/12) that Indonesia's foreign exchange reserves fell further in November. Based on the Bloomberg Dollar Index, the rupiah had depreciated by 0.19 percent to IDR 13,887 per US dollar at 15:30 pm local Jakarta time on Tuesday (08/12). Other factors that put pressure on the rupiah are the low oil price (giving rise to a strong US dollar), weak trade data from China, and the looming US interest rate hike.

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The Indonesian government will engage in front loading, issuing 61 percent of next year's total planned state bonds - worth IDR 532.4 trillion (approx. USD $38.6 billion) - in the first half of 2016. Proceeds are used to finance the 2016 State Budget. Earlier, on 2 December 2015, the government had already sold USD $3.5 billion worth of bonds to cover a shortfall in the 2016 State Budget, deliberately ahead of the possible US interest rate hike in mid-December (as this move is expected to reduce investor appetite for emerging market assets).

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Today, Indonesian integrated fishery, marine product processing and cold storage company Dua Putra Utama Makmur will be listed on the Indonesia Stock Exchange (IDX), hence becoming the 13th company to have conducted an initial public offering (IPO) on the IDX this year. Previously it was reported that the IPO of Dua Putra Utama Makmur was oversubscribed 1.5 times, reflecting robust demand. Overall, however, the number of IPOs on the IDX has been disappointing in 2015. Next year is expected to be a better year.

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The foreign exchange reserves of Indonesia fell slightly in November. According to the latest data from Indonesia's central bank (Bank Indonesia) the reserves stood at USD $100.24 billion at end-November, down from USD $100.7 billion at the end of the preceding month. The reserves fell on foreign exchange receipts, public foreign debt payments and the central bank's efforts to stabilize the rupiah exchange rate.

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Due to heightened expectation of a US interest rate hike in December, the US dollar was pushed to a seven-month high today. As a consequence, the rupiah depreciated 0.73 percent to IDR 13,722 per US dollar (Bloomberg Dollar Index). Moreover, the strong US dollar impacted negatively on commodity prices. Many commodity prices, including oil, copper and nickel plunged severely on today's trading day. For key commodity producers, which include Indonesia, falling commodity prices put pressure on assets.

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Indonesian assets produced a strong finish on Friday (20/11). The benchmark Jakarta Composite Index and rupiah both strengthened considerably on increased certainty about the timing of higher US interest rates, while China announced it implemented more measures to encourage economic growth, giving rise to a stronger yuan (supporting stronger emerging currencies in Asia). Indonesian stocks rose 0.94 percent to 4,561.33 points, while the rupiah appreciated 1.10 percent to IDR 13,623 per US dollar (Bloomberg Dollar Index).

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Total outstanding foreign debt of Indonesia fell to USD $302.4 billion at the end of the third quarter of 2015, down USD $2.1 billion from the end of the preceding quarter. The central bank of Indonesia (Bank Indonesia) said both public and private external debt declined in Q3-2015 as both sectors were reluctant to take up new (overseas) debt amid global uncertainties, Indonesia's sluggish economic growth, and the fragile rupiah (ahead of looming capital outflows brought about by higher US interest rates).

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Stock indices in Asia were mixed on Wednesday (18/11), while most emerging market currencies depreciated against the US dollar. The Indonesian rupiah was under pressure - touching a six week low - after the central bank (Bank Indonesia) cut the primary minimum statutory reserves from 8.00 percent to 7.50 percent (effective per 1 December 2015), hence providing local financial institutions approximately USD $1.8 billion more in liquidity. However, it may not be enough to trigger an increase in lending as banks are more focused on lending quality than quantity.

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Indonesian Finance Minister Chatib Basri said that the lower pace of economic growth in China, the world’s second-largest economy, is a major concern for Indonesia as it leads to declining demand for commodities (and thus places downward pressure on commodity prices). As Indonesia is a major commodity exporter - such as coal, crude palm oil, nickel ore and tin - the country feels the impact of weak global demand for commodities. About 60 percent of Indonesia’s exports are commodities, mostly raw ones.

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Bank Indonesia decided to hold the key interest rate (BI rate) at 7.50 percent in October, with the Lending Facility and Deposit Facility rates kept at 7.50 percent and 5.75 percent, respectively. This level is expected to help control inflation at 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level. Despite stable domestic conditions, Bank Indonesia sees risks: contagion risk stemming from US monetary tightening and possible higher subsidized fuel prices.

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Technically the benchmark stock index of Indonesia (Jakarta Composite Index, or IHSG) had to rebound after sharp declines during the last couple of trading days making Indonesian stocks relatively cheap. The IHSG was also supported by rising stock indices in Japan and Hong Kong that rose on strong US jobs data (although other Asian markets fell due to concerns about sooner-than-expected US interest rate hikes. Meanwhile, the rupiah continued to depreciate as the market is concerned about the political situation in Indonesia.

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Amid political uncertainty and a looming increase in US interest rates, Indonesian stocks and the rupiah exchange rate weakened considerably in the past week. Market participants are increasingly concerned about the situation in Indonesia’s parliament where a majority of political parties - named the Merah-Putih coalition (led by defeated presidential candidate Prabowo Subianto) - is expected to undermine president-elect Joko Widodo’s reform programs as well as the democratic foundations of the country.

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Indonesia’s House of Representatives (DPR) approved the 2015 State Budget on Monday (29/09) that was proposed by the outgoing President Susilo Bambang Yudhoyono administration. The budget deficit is now set at IDR 245.9 trillion (USD $20.5 billion), equivalent to 2.21 percent of gross domestic product (GDP), and lower than the 2.32 percent of GDP proposed by the government in both the Financial Memorandum and the Revised 2015 State Budget. However, the accepted budget deficit is still high compared to previous years.

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US Federal Reserve Chairwoman Janet Yellen reminded global investors to prepare for a sooner-than-expected US interest rate hike (Fed Funds Rate, FFR) provided that the economy of the USA - the world’s largest economy - continues its improving trend. In fact, speculation has emerged that the FFR will be raised before the end of 2014 although Yellen stated more than once that the ‘close-to-zero’ interest rate environment would be maintained for a considerable period after the US bond-buying program (quantitative easing) has ended.

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In line with the trend on other Asian stock indices, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) fell on Monday (22/09) amid profit taking after three days of gains. Not even the appreciating rupiah exchange rate and net buying of foreign investors (IDR 26.6 billion) were able to push Indonesia’s index into the green zone. The IHSG declined 0.15 percent to 5,219.80 points. All sectors on the Indonesia Stock Exchange (IDX) fell except for the consumer goods and finance sectors.

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The central bank of Indonesia (Bank Indonesia) will not lower its key interest rate (BI rate) until accelerated inflation (brought on by the looming subsidized fuel price hike at the end of the year) has eased and US interest rates are stable (the US Federal Reserve may raise its key interest rate in the second or third quarter of 2015). This implies that the relatively high interest rate environment in Indonesia (the key BI rate has been at 7.50 percent for almost a year) will continue (to safeguard financial stability) at the expense of higher economic growth.

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Indonesia’s fuel subsidy policy is estimated to have a large influence on investors’ confidence in the financial or fiscal fundamentals of Southeast Asia’s largest economy and thus on the performance of the local stock index and currency. New president elect Joko Widodo (popularly known as Jokowi) is expected to raise prices of subsidized fuels after taking office in late October 2014 in an attempt to combat the country’s wide current account deficit (mainly caused by expensive oil imports to meet domestic fuel demand).

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) closed 1.12 percent higher on Wednesday (17/09) supported by Tuesday’s positive stock indices on Wall Street as well as speculation that the US Federal Reserve will not raise its key interest rate yet. Today (17/09), the Federal Reserve will conclude its Federal Open Market Committee (FOMC) meeting. Lastly, after weak economic data, it was reported that China’s central bank (PBOC) injected USD $82 billion into the country's five largest banks.

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