The Indonesian rupiah exchange rate moved rather sideways on Friday (04/04). Based on the Bloomberg Dollar Index, the currency appreciated 0.06 percent to IDR 11,316 per US dollar. Most emerging Asian currencies tended to depreciate against the greenback as the market is waiting for US unemployment data, released later today. Overall, market participants remain confident in Indonesia's economic fundamentals as inflation eased to 7.32 percent (yoy) in March, while the country posted a trade surplus of USD $785 million in February.

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The Indonesian rupiah exchange rate depreciated 0.25 percent to IDR 11,323 per US dollar on Thursday (03/04) according to the Bloomberg Dollar Index. Analysts Rangga Cipta (Samuel Sekuritas Indonesia) and Zulfirman Basir (Monex Investindo Futures) expect the rupiah to move sideways or weaken toward the end of the week as the market is waiting for various data, including the meeting of the European Central Bank regarding its interest rate (03/04), US unemployment, US nonfarm payrolls and US ISM Non-Manufacturing PMI.

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Based on the Bloomberg Dollar Index, the Indonesian rupiah exchange rate appreciated 0.15 percent to IDR 11,647 per US dollar on Wednesday (26/02). All through the day, the currency traded within a fairly narrow trading range, possibly due to market participants' wait and see attitude ahead of the release of important US economic indicators. As the US economy is improving and the US unemployment rate is declining, the Federal Reserve may wind down its quantitative easing program in a more aggressive manner soon.

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The Indonesian rupiah exchange rate depreciated 0.14 percent to IDR 11,665 per US dollar on Tuesday (25/02) based on the Bloomberg Dollar Index. The currency's depreciation was due to US dollar demand from Indonesian importers while offshore funds engaged in profit taking as the rupiah is the best performer in February 2014 among 31 major currencies tracked by Bloomberg (against both the euro and US dollar). The rupiah is also the best-performing Asian currency this year so far.

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On Sunday (23/02), the first G20 Finance Ministers and Central Bank Governors Meeting was concluded. In a statement, the finance ministers and central bank governors committed to implement policies to grow collective GDP by over 2 percent above the current trajectory over the next five years. Realistically, these policies could mean an extra USD $2 trillion in global economic activity and tens of millions of additional jobs. Each country will deliver a comprehensive growth strategy as part of the Brisbane Leaders Summit in November.

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Market participants were pleased to see the trade balance of Indonesia posting an unexpected USD $1.52 billion surplus in December 2013, almost twice as high than previous forecasts. This December surplus is the highest monthly surplus since December 2011. Exports rose 6.56 percent from November 2013 and 10.33 percent from December 2012, while imports rose 2.04 percent from November 2013 but declined 0.79 percent from December 2012. Although showing an easing trend, Indonesia posted a trade deficit of USD $4.06 billion in full 2013.

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On Tuesday (21/01), the International Monetary Fund (IMF) sent a positive message to the world as it slightly raised its forecast for global economic growth in 2014. The main reason for this upward revision is the improving economy of the USA. According to the IMF, the US economy will grow 2.8 percent in 2014 (0.2 percentage points higher than the IMF's previous outlook released in October 2013). Due to stronger US growth, the global economy is now expected to expand by 3.7 percent (0.1 percent up from its previous forecast).

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Forecasts for economic growth in Indonesia in 2014 are still optimistic. The government of Indonesia targets a 6 percent growth rate, while the country's central bank (Bank Indonesia) expects GDP growth in the range of 5.8 to 6.2 percent. Although these forecasts clearly fall short of the target set in the country's National Medium Term Development Plan (RPJMN) - which mentions annual GDP growth of between 6.3 and 6.8 percent - the forecasts are still rather positive given the global uncertain and volatile economic context in recent years.

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Last Friday, the International Monetary Fund (IMF) released its January 2014 Commodity Market Monthly. This report provides an update on global commodity prices. According to the report, global commodity prices rose 2.4 percent in December 2013, with increases in most main indices. During 2013, commodity prices increased 0.8 percent, with gains concentrated in the energy sector, up 3 percent from December 2012. Metals prices declined 7 percent due to continued increases in new capacity.

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Deputy Trade Minister Bayu Krisnamurthi said that the Indonesian government is preparing two strategic steps to anticipate the negative impact of the winding down of the Federal Reserve's quantitative easing program. In January 2014, the Fed's bond-buying program will be reduced from USD $85 billion to USD $75 billion per month. The two strategic steps, which will enhance financial stability in Southeast Asia's largest economy, involve the curtailing of Indonesia's current account deficit and high inflation.

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I have been living in Indonesia for more than eight years (and before permanently moving to this beautiful country I had been visiting Indonesia frequently since late- 1998). But although I’m currently far away from the West, I’ve never been following Western politics and Western media closer than I am doing now - and with Western politics I mainly refer to the political and (interrelated) social developments in the European Union (EU) and the United States (US).

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Contrary to our usual coverage, in this edition of the monthly Indonesia Investments’ report there is some emphasis on political and socioeconomic developments in the West (referring to the United States and the European Union). The main reason for this is that the West – and we have seen this throughout history (for example during colonial days) – has a huge influence on the rest of the world, including Indonesia.

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As stock markets continue to trade near precarious highs and an underlying current of geopolitical uncertainty continues to limit the outlook for equities in 2019, it is not entirely surprising to see going prices rallying. Indeed, this has been our price forecast for several weeks. But the confirmation of these forecasts came as the result of new evidence indicating weakness in US labor markets and rising expectations that the Federal Reserve will be forced to reduce interest rates more than previously anticipated. 

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U.S. stock markets continue to hover near record levels as trade policy conversations between President Donald Trump and President Xi Jinping define the relationship between the world’s two largest economies. The Dow Jones Industrial Average is currently trading just shy of 26,000, which is a psychological level that is often closely-watched by the financial markets.

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Across the world, leaders express criticism on US President Donald Trump's decision to officially recognize Jerusalem as the capital city of Israel. Moreover, Trump announced that the American embassy is to be relocated from Tel Aviv to Jerusalem. While Trump claims that these decisions constitute a step to advance the peace process and emphasizes that the US will continue to facilitate the peace process between both sides, fierce criticism unleashed following Trump's statements.

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Now the United States - under the Donald Trump administration - are focused on their "America First" policy, China is able to increase its influence in the Asian region. This was apparent at the 30th Association of Southeast Asian Nations (ASEAN) summit on April 26-29 at the Philippine International Convention Center in Pasay City where regional leaders expressed their support for the denuclearization of North Korea but were reluctant to discuss the tensions around the South China Sea.

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The Indonesian government is currently studying the opportunities and challenges with regard to the making of a new bilateral trade deal with the USA. These efforts are a side-effect of US Vice President Mike Pence's recent visit to Indonesia when he signed 11 trade and investment deals worth a combined USD $10 billion.

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Mike Pence, the Vice President of the United States, visited Indonesian President Joko Widodo on Thursday morning (20/04) at the presidential palace in Jakarta as part of Pence's Asia-Pacific tour (15-25 April 2017). Main goals of Pence's visit to several Asia-Pacific nations are to enhance diplomatic relations, improve regional security cooperation, and seek fairer trade. Pence arrived in Jakarta on Wednesday evening, directly from Japan where he emphasized US commitment to rein in North Korea's nuclear and missile ambitions.

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As promised US President Donald Trump pulled the United States out of the Trans-Pacific Partnership (TPP), an ambitious free trade deal that was signed in October 2015 (after five years of negotiating) and had created the world's largest free trade area (covering 12 countries and 40 percent of global trade). Trump's move to withdraw the USA from the TPP implies that he distances the USA from its Asian allies and gives China the opportunity to fill in the empty space that is left by America.

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Indonesia has always been hesitant to join free-trade deals with other nations on fears that domestic industries cannot compete with foreign counterparts, which could lead to an influx of cheaper, yet higher-quality foreign products. During his visit to the White House, Indonesian President Joko Widodo said Indonesia intends to join the Trans-Pacific Partnership (TPP) trade deal. Back home, this statement led to concern. What are the negative consequences for Indonesia when joining this deal?

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