The Indonesian rupiah continued its downward spiral on Monday morning (25/11). The central bank's mid rate fell 0.14 percent to IDR 11,722 per US dollar. Last week, the rupiah fell amid negative market sentiments brought on by the result of the Federal Reserve's FOMC meeting. The result seems to indicate that it will not take long before the quantitative easing program will be wound down. Contrary to the Australian dollar as well as the Indian rupee, news about the forthcoming financial reformation in China is unable to the support the rupiah.

Read more ›

Several analysts expect that the central bank of Indonesia (Bank Indonesia) will raise its key interest rate (BI rate) again in the first Semester of 2014 in order to anticipate the winding down of the Federal Reserve's monthly USD $85 billion stimulus program (quantitative easing). Currently, the BI rate is set at 7.50 percent but analysts say that the market should be prepared for a hike to 8.0 percent in the first half of 2014. Between June and November 2013, Bank Indonesia has already raised its benchmark interest rate from 5.75 to 7.50 percent.

Read more ›

Fitch Ratings, one of the three major global rating agencies, affirmed Indonesia's sovereign credit rating at BBB- with a stable outlook. In a press release, the rating agency mentioned four key factors that led to the affirmation of the sovereign rating. These are: good policy management by Indonesia's central bank (Bank Indonesia) and government amid external pressures, relatively high economic growth, prudent fiscal management (resulting in low public debt), and a strong banking sector (confirmed by multiple stress tests).

Read more ›

Agus Martowardojo, Governor of Indonesia's central bank, expects the Indonesian economy to consolidate in 2014. The country is currently experiencing an economic correction with GDP growth slowing to 5.62 percent in the third quarter of 2013. Martowardojo said that the current account deficit still needs time to reach a healthy level. Indonesia's current account deficit stood at USD $8.4 billion (equivalent to 3.8 percent of the country's GDP) in the third quarter of 2013, down from USD $9.8 billion (4.4 percent of GDP) in the second quarter.

Read more ›

Concerns about the looming end of the Federal Reserve's monthly USD $85 billion stimulus program (known as quantitative easing or QE3) in combination with the deteriorating domestic economy of Indonesia has caused Indonesia's benchmark stock index (IHSG) to plunge 1.95 percent in the first trading session of 13 November 2013. The Indonesian rupiah exchange rate depreciated 0.28 percent to IDR 11,600 according to Bloomberg. These developments happen one day after the decision of Indonesia's central bank to raise the BI rate to 7.50 percent.

Read more ›

Agus Martowardojo, Governor of Indonesia's central bank (Bank Indonesia), stated that the country's economy is expected to grow 5.7 percent in 2013. Bank Indonesia believes GDP growth in the fourth quarter of 2013 to fall below the growth figure realized in Q3-2013 (5.62 percent). Martowardojo said that the government needs to continue measures to improve the country's exports, while trying to curtail imports of oil and gas as domestic demand for fuels remained high, even after the increase in prices of subsidized fuels in June 2013.

Read more ›

Indonesia's foreign exchange (forex) reserves totalled USD $97.0 billion at the end of October 2013, up USD $1.3 billion from the previous month (USD $95.7 billion). Consequently, the current level of foreign exchange reserves is equivalent to 5.5 months of imports and the government’s foreign debt payment. Bank Indonesia considers the current stockpile of forex reserves adequate to bolster external sector resilience and is above international adequacy standards.

Read more ›

Today (06/11), Statistics Indonesia announced that Indonesia's gross domestic product (GDP) expanded 5.62 percent in the third quarter of 2013 from the same period in 2012. The result implies the continuation of Indonesia's slowing economic growth as Q3-2013 constitutes the fifth consecutive quarter in which the country recorded slowing economic growth. Previously, the government had already expressed its concern about the GDP growth figure in Q3-2013 because the current high inflation rate curbs household consumption.

Read more ›

The central bank of Indonesia (Bank Indonesia) sees a continued easing trend in inflationary pressures in October 2013. Indonesia's inflation in October 2013 was recorded at 0.09 percent (month-to-month), thus confirming the indication that monthly inflation is back to its normal pattern in the last five years. However, the annual inflation pace is still high at 8.32 percent (yoy). Limited inflation in October was influenced by deflation of the food group component (0.80 percent mtm), although commodity prices rose (especially red chili).

Read more ›

Inflation in October 2013 was recorded at 0.09%. This low inflation rate was mainly supported by easing food and clothes prices. The foodstuffs component in the basket recorded deflation of 0.34 percent, while clothes posted deflation of 0.56 percent. These details were presented by Suryamin, Head of Statistics Indonesia (BPS) on Friday (01/11). The 0.09 percent October inflation rate is low compared to past results in the same month with the notable exception of October 2011 when 0.12 percent of deflation was recorded.

Read more ›

The central bank of Indonesia (Bank Indonesia) expects that the country’s current account deficit will only ease slightly in 2014. Last year, the deficit reached 3.3 percent of Indonesia’s gross domestic product (GDP), a level which is generally considered unsustainable and leads to reduced investor confidence. Countries that have to cope with a wide current account deficit, such as Indonesia and India, are highly vulnerable in times of global shocks as investors will quickly withdraw their investments from assets in these countries.

Read more ›

The Indonesian rupiah exchange rate depreciated 0.54 percent to IDR 11,822 per US dollar in the past week (based on the Bloomberg Dollar Index). Several internal and external factors influenced the currency’s performance over the past week, such as increased US dollar demand from local Indonesian companies, Bank Indonesia’s decision to leave the BI rate unchanged and the improving US economy. Lastly, the structural current account deficit (triggered by expensive oil imports) remains a problem for investors.

Read more ›

The central bank of Indonesia (Bank Indonesia) kept its key interest rate (BI rate) at 7.50 percent for the tenth consecutive month as inflation is under control and well within the year-end target of the central bank (3.5-5.5 percent). The lending facility and deposit facility were kept at 7.50 percent and 5.75 percent, respectively, at Thursday’s Board of Governor’s Meeting (11/09). The central bank also expects that the current interest rate environment is capable of curbing the country’s wide current account deficit.

Read more ›

The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) declined 0.92 percent to 5,136.86 points on the last trading day of the week. Seven of the ten sectorial indices fell, led by the finance sector (-1.66 percent), followed by consumer goods (-1.50 percent) and manufacturing (-1.34 percent). The main reason for this poor performance is that investors are again looking at the true fundamentals of the Indonesian economy instead of optimism about Joko Widodo becoming Indonesia’s seventh president.

Read more ›

The central bank of Indonesia (Bank Indonesia) announced two important matters on Thursday (14/08). Firstly, the institution decided to maintain the benchmark interest rate (BI rate) at 7.50 percent, the overnight deposit facility rate (Fasbi) at 5.75 percent, and the lending facility rate at 7.50 percent. Secondly, it announced that Indonesia’s current account deficit widened to USD $9.1 billion, or, 4.27 percent of the country's gross domestic product (GDP) in the second quarter of 2014, a widening that is larger than initially forecast.

Read more ›

Weakening global stock indices meant that it would be difficult for the benchmark stock index of Indonesia (Jakarta Composite Index or IHSG) to continue its upward movement on Tuesday (05/08). Moreover, there were few positive sentiments originating from the Archipelago as Indonesia’s Q2-2014 GDP growth (+5.12 percent year-on-year) was below expectation and the country’s trade balance showed a deficit of USD $300 million in June 2014. Meanwhile, the Indonesian rupiah exchange appreciated slightly.

Read more ›

According to Statistics Indonesia (BPS), the country’s trade balance in June 2014 recorded a deficit of USD $0.30 billion after the USD $0.05 billion surplus in the previous month. The performance of Indonesia’s trade balance was influenced by shrinkage of the country’s non-oil & gas surplus amid a lower oil & gas deficit compared to May 2014. Meanwhile, inflation was up 0.93 percent (month-to-month) in July 2014; a good performance amid the Ramadan and Idul Fitri festivities. Annual inflation eased to 4.53 percent (year-on-year).

Read more ›

Former Deputy Governor of Indonesia's central bank (Bank Indonesia) Budi Mulya was sentenced to ten years imprisonment and a fine of IDR 500 million on Wednesday (16/07) after being found guilty of self-enrichment and corruption in connection to the government's USD $573 million bailout package for Bank Century in 2008 when, amid the global financial crisis, this bank was on the brink of collapse. However, many disagree that Bank Century was about to collapse as no deep analysis had been conducted on the financial condition of the bank.

Read more ›

At Bank Indonesia’s Board of Governors’ meeting, convened today (10/07), it was decided to keep the country’s benchmark interest rate (BI rate) at 7.50 percent, and the Lending Facility and Deposit Facility rates held at 7.50 percent and 5.75 percent, respectively. According to the central bank this policy is consistent with efforts to steer inflation back towards the target corridor of 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.

Read more ›

Although the Indonesian rupiah exchange rate appreciated 0.86 percent to IDR 11,995 per US dollar on Friday (27/06) as economic data from China, South Korea and Taiwan sparked optimism that regional growth has picked up, the recent depreciating trend of Indonesia’s currency burdens the country’s manufacturing industry. This industry is still dependent on imports of raw materials, capital goods and auxiliary materials, which are paid using US dollars causing the domestic industry to feel the financial impact of a weaker rupiah.

Read more ›