Business as Usual in Indonesia: a Day of Gain is Followed by a Day of Loss
One of the main problems of Indonesia's benchmark stock index (IHSG) is the profit taking that immediately happens after a day of strong growth. On Wednesday (11/12), the IHSG index was plagued by profit taking since the start of the first trading session. Moreover, the index was impacted by mostly falling Asian stock indices as well as the Indonesia rupiah exchange rate which went above the IDR 12,000 per US dollar level again. The only support the IHSG received was just before its closing when European indices opened up.
Ahead of Bank Indonesia's Board of Governor's meeting, the rupiah exchange rate continued to depreciate against the US dollar. Market participants are waiting for news about the country's benchmark interest rate (BI rate). Speculation emerged that the BI rate will be raised at the meeting. The meeting is scheduled to take place on Thursday (12/12). Moreover, investors are worried about a sooner-than-expected end of the Federal Reserve's quantitative easing program. Next week, the FOMC meeting will be held that is expected to povide more information about the future of the program.
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