The Indonesia rupiah exchange rate is moving sideways on Wednesday's trading day (08/01). At 13:00 local Jakarta time, the rupiah was down 0.02 percent to IDR 12,240 per US dollar based on the Bloomberg Dollar Index. This morning the US dollar slightly depreciated against most Asian currencies after the International Monetary Fund (IMF) said to plan to upgrade its forecast for global economic growth as the US economy improves. Yesterday, Indonesia held Asia's largest US dollar-denominated bonds since 1998.

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In line with most other Asia-Pacific currencies, the Indonesia rupiah exchange rate continued its depreciating trend against the US dollar on Tuesday morning (07/01). Market participants tend to avoid the rupiah and prefer to wait & see for international data first. For example, today's release of the minutes of the Federal Open Market Committee (FOMC). This will inform about the stance of Federal Reserve officials on the winding down of the quantitative easing program (planned for this January).

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The Indonesia rupiah exchange rate continued its downward trend on Monday (23/12). Both Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) and Bloomberg's Dollar Index showed a depreciating rupiah. The JISDOR, which was launched by Bank Indonesia in May to manage exchange rate fluctuations, fell 0.01 percent to IDR 12,246 per US dollar, while the Bloomberg Dollar Index indicated a 0.29 percent decline of the rupiah to IDR 12,250 per US dollar at 14:10:09 afternoon, local Jakarta time.

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Indonesia's Finance Minister Chatib Basri expects that Indonesia's economic growth in 2013 will reach 5.7 percent, significantly below the government's initial target of 6.3 percent. Basri announced his expectation at the government's economic evaluation and projection meeting. According to Basri, Indonesia's economic growth is stable, despite its slowing trend. Among the G20 member countries, only China will post higher GDP growth (7.8 percent up to the third quarter). Indonesia's inflation rate is expected to reach 8.5 percent (yoy) at the year-end.

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The central bank of the United States, the Federal Reserve (FED), announced that it will start winding down its quantitative easing program in January 2014. Currently, the Fed purchases USD $85 billion worth of bonds per month but this amount will be reduced to USD $75 billion next month. The Fed came to this decision as prospects of the US labor market have shown a marked improvement, while economic growth is expected to accelerate to between 2.8 and 3.2 percent in 2014 and between 3.0 to 3.4 percent in 2015.

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The Bank of Japan (BoJ) and Bank Indonesia (BI) signed the third Bilateral Swap Arrangement (BSA) on 12 December 2013. The arrangement is an expansion of the current BSA which almost doubles the size of the facility from USD $12 billion to $22.76 billion. This arrangement also introduces a new feature in the form of a crisis prevention scheme to support potential and/or actual liquidity needs. Both institutions also agreed to establish a cross-border liquidity arrangement to enhance the stability of financial markets.

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In Bank Indonesia's Board of Governors' meeting - held on Thursday (12/12) - it was decided to keep the country's benchmark interest rate (BI rate) at 7.50 percent. Executive Director of Bank Indonesia's Communication Department Difi A. Johansyah said that the current rate of 7.50 percent is in line with the institution's inflation target of 4.5 percent (plus or minus one percent). The lending facility and deposite facility (Fasbi) rates are also maintained at 7.5 percent and 5.75 percent respectively.

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The central bank of Indonesia (Bank Indonesia) announced that Indonesia’s official reserve assets totaled USD $97.0 billion at the end of November 2013 thus unchanged from the end of the previous month. Bank Indonesia stated that this amount is equivalent to 5.5 months of import or 5.3 months of import and servicing of government external debt. After having grown sharply in recent years, Indonesia's foreign exchange reserves have fallen from USD $112.8 billion at end-2012 as Bank Indonesia tried to support the depreciating rupiah exchange rate.

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According to the Bloomberg Dollar Index, the Indonesia rupiah exchange rate fell 0.09 percent to IDR 11,976 per US dollar as per 13:46:18 local Jakarta time on Friday (06/12). It is expected that this slight depreciation of the rupiah will continue for the remainder of the trading day. The rupiah received some support from Moody's Investors Service, which stated that the rupiah depreciation itself is not a trigger for a rating downgrade. The ratings agency affirmed the country's Baa3 rating due to Indonesia's strong growth and low debt level.

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The Indonesia rupiah exchange rate continued its depreciation on Wednesday (04/12). The central bank's Jakarta Interbank Spot Dollar Rate fell 1.09 percent to IDR 11,960 per US dollar after absorbing the impact of the currency's weak performance on yesterday's spot market. On Tuesday (03/12), local Indonesian companies were buying US dollars at a more attractive exchange rate after the currency had appreciated previously, thus placing serious downward pressure on the currency of Southeast Asia's largest economy.

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For most of this year, the Indonesian rupiah has met selling pressure against the US Dollar. Year-to-date price activity in the USD/IDR shows a rise from below IDR 12,250 to new highs above IDR 13,330 per US dollar. For Indonesian export companies, this is great news as it means that their products will be cheaper for foreign consumers to buy. For the domestic economy, this creates a different set of implications as it also makes it less likely that foreign investors will be looking to buy into Indonesian assets.

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Selama setahun terakhir, rupiah telah menguat terhadap berbagai jenis mata uang asing. Namun penguatan ini tidak berlaku terhadap dollar Amerika Serikat (AS). Pada periode waktu yang sama, rupiah menguat terhadap mata uang asing lainnya dan sebaliknya rupiah melemah terhadap dollar AS. Untuk banyak investor yang berfokus pada pasar mata uang, mungkin tampaknya seakan dua mata uang ini hanya sedikit berhubungan. Namun, kalau kita melihat trend yang berkembang selama setahun terakhir, menjadi jelas bahwa keadaannya tidak seperti itu.

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Amid weakening emerging Asian currencies, Indonesia’s rupiah exchange rate touched a six-year low on Friday (12/12) after US consumer spending rose in November while US jobless claims fell (signalling a strong recovery in the world’s largest economy). Based on the Bloomberg Dollar Index, the rupiah depreciated 0.95 percent to IDR 12,467 per US dollar on Friday. Besides the impact of the US dollar’s bullish momentum, the rupiah also weakened on year-end US dollar demand from local companies for debt payments.

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The Indonesia rupiah exchange rate appreciated slightly on Tuesday (02/12). By 12:50 pm local Jakarta time, the currency had appreciated 0.03 percent to 12,277 per US dollar according to the Bloomberg Dollar Index. Yesterday, Indonesia’s currency had depreciated to the lowest level since January 2014 after official government data showed that inflation had accelerated sharply, while exports contracted more than expected, implying that the country’s wide current account deficit remains troublesome.

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In line with most other Asian emerging currencies, Indonesia’s rupiah exchange rate depreciated on Friday (28/11). Market players continue to buy US dollars amid falling oil prices. Japan’s yen even fell to a seven-year low against the US dollar after government data showed that household spending declined four percent (y/y) and inflation slowed in the world’s third-largest economy. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.22 percent to IDR 12,204 per US dollar by 15:35 pm local Jakarta time.

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The Indonesian rupiah exchange rate depreciated 0.09 percent to IDR 12,164 per US dollar on Tuesday (25/11) according to the Bloomberg Dollar Index. The performance is caused by local companies’ month-end US dollar demand as well as US dollar buying by Indonesia’s central bank. Although unconfirmed, it is speculated that the central bank is boosting its foreign exchange reserves ahead of a looming external shock triggered by higher US interest rates in the second or third quarter of 2015.

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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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Indonesian stocks plunged considerably on Thursday (02/10). The country’s benchmark stock index (Jakarta Composite Index, abbreviated IHSG) declined 2.73 percent to 5,000.81 points, the largest drop in almost six months. This poor performance was caused by both external and internal factors. Externally, various weak economic data from the USA and Europe as well as an appreciating yen impacted negatively on Asian stock indices. Internally, market participants responded negatively toward the inauguration of the new parliament.

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Although Indonesia’s September 2014 inflation (0.27 percent m/m) and appreciating rupiah exchange rate had a positive impact on the performance of Indonesia’s benchmark stock index (Jakarta Composite Index, abbreviated IHSG) on Wednesday (01/10), its gain was limited by declining indices on Wall Street on the previous day as well as Indonesia’s August trade deficit (USD $318.1 million), which resulted in foreign net selling of worth IDR 388 billion of Indonesian stocks. The IHSG climbed 0.06 percent to 5,140.91 points.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rose 0.18 percent to 5,142.01 points on Monday (29/09) despite the sharp depreciation of the Indonesian rupiah exchange rate. Possibly market participants took advantage of relatively cheap blue chip stocks after the 1.3 percent drop on Friday (26/09) caused by negative market sentiments brought about by the parliament’s passing of a bill which abolishes direct voting of regional leaders. Foreign investors recorded net selling of IDR 542.4 billion.

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