Both Indonesia's Rupiah and Stock Index Strengthen on Wednesday
Positive market sentiments stemming from Wall Street pushed Indonesia's benchmark stock index (known as the Jakarta Composite Index or IHSG) further up on Wednesday (12/02). Even though technical indicators (such as the bollinger band) suggest that the majority of Indonesian stocks are close to the overbought area, it did not prevent investors from stock trading. The appreciating rupiah exchange rate, rising Asian indices and positive openings in Europe all contributed to the IHSG's 0.58 percent gain to 4,496.29 points.
It is interesting to note that the rupiah rate appreciated after the first speech of Janet Yellen as new Head of the Federal Reserve. Ahead of the speeches of her predecessor, Ben Bernanke, the rupiah tended to be corrected, particularly after the announcement of tapering. This time it was different: the rupiah appreciated. In her first speech, Yellen was optimistic about the US economy and foresees less money printing but continued low interest rates. Market participants are optimstic that the improved US economy will provide a boost for Indonesia's exports.
The central bank's Jakarta Interbank Spot Dollar Rate (JISDOR) appreciated 0.48 percent to IDR 12,115 per US dollar on Wednesday (12/02).
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