The Indonesian rupiah continued to depreciate on Friday (07/08). Based on the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.09 percent to IDR 13,541 per US dollar on the last trading day of the week. As such, the rupiah continued to flirt with a 17-year low. With US nonfarm payrolls expected to improve at a steady pace, implying that an US interest rate hike may come sooner than later, the US dollar’s bullish momentum persisted. Meanwhile, Indonesia’s foreign exchange reserves fell by USD $40 million in July.

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Once again, the Indonesian rupiah depreciated beyond the IDR 13,500 per US dollar level on Wednesday (05/08), touching its weakest level since the Asian Financial Crisis (which began as a financial crisis but would soon develop into a deep economic, political and social crisis in Indonesia) in 1997-1998. For some Indonesian policy makers, business players and investors the current weak rupiah therefore brings back bad memories. However, there are significant changes between conditions now and those in 1997-1998.

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There are still persistent external and internal factors that make it difficult for Indonesian stocks to rise. By 12:07 am local Jakarta time, Indonesia’s benchmark stock index (Jakarta Composite Index) was down 0.25 percent to 4,788.37 points. Meanwhile, the rupiah had appreciated 0.36 percent to IDR 13,462 per US dollar by the same time according to the Bloomberg Dollar Index. What are the external (foreign) and internal (domestic) factors that influence the performance of Indonesian assets on today’s trading day (04/08)?

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On 2 August 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic subjects such a forecast for Indonesia’s economic growth in the Q2-2015, an update on the rupiah rate, foreign direct investment realization in Q2-2015, consumer confidence, new tax regulations in the palm oil sector, and more.

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In line with the general trend in Southeast Asia, Indonesian stocks traded mostly higher on the last trading day of the week. Despite not-so-good H1-2015 corporate earnings reports from the larger listed Indonesian companies, the benchmark Jakarta Composite Index was up 1.33 percent to 4,775.10 points in the first trading session on Friday (31/07). According to market watchers, Indonesia’s index is experiencing a technical rebound after falling earlier this week. However, the index is still on track to post its second straight monthly decline.

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Similar to yesterday, Indonesian stocks and the rupiah are still moving cautiously on Thursday (30/07). Supported by yesterday’s rising US stocks and today’s mostly rising stocks in the Asia-Pacific region, the benchmark Jakarta Composite Index climbed 0.22 percent in the first trading session on Thursday. However, the latest statements from the US Federal Reserve also signal that a US interest rate hike is coming closer, hence giving rise to a stronger US dollar at the expense of most global currencies and the gold price.

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Indonesian stocks and the rupiah continued to weaken on the first trading day of the week, especially due to negative global market sentiments. China’s Shanghai Composite Index tumbled a staggering 8.48 percent on Monday (27/07), its worst daily percentage fall since February 2007. Furthermore, Wall Street closed broadly lower on Friday (24/07) for the fourth straight day. Meanwhile, the Indonesian rupiah continued to depreciate against the US dollar, making Indonesian assets unattractive to foreign investors.

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The Indonesia Investment Coordinating Board (BKPM) announced today (27/07) that - in rupiah terms - foreign direct investment (FDI) in Indonesia rose 18.2 percent (y/y) to IDR 92.2 trillion rupiah in the second quarter of 2015, the fastest growth pace recorded since 2013. However, in US dollar terms, FDI fell to USD $7.38 billion in Q2-2015 from USD $7.43 billion in the same quarter one year earlier. The BKPM uses an IDR 12,500 per US dollar exchange rate in 2015 and an IDR 10,500 per US dollar exchange rate in 2014.

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On 26 July 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic subjects such Indonesia’s coal royalties, a July inflation update, the weak performance of Indonesian stocks and the rupiah, revised regulations regarding the position of foreign workers in Indonesia, and more.

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Indonesia’s decision to raise import tariffs for food, cars, clothes as well as various other consumer goods put additional downward pressure on Indonesian stocks on the last trading day of the week (24/07). Those listed companies (retailers) that rely on imported goods saw their shares tumble as a consequence of the higher import tariffs. The Indonesian Finance Ministry raised import duties for consumer goods between 10 and 150 percent (depending on product) in a bid to boost the country’s consumer goods industry and curtail imports.

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Amid mostly gaining stock markets in Southeast Asia on Tuesday (11/11), the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rebounded sharply after several days of declines. Most Indonesian blue chip stocks rose considerably after having tumbled in recent days. Positive market sentiments were caused by Joko 'Jokowi' Widodo’s participation in the Asia Pacific Economic Cooperation (APEC) summit in Beijing as well as news that both camps in Indonesian parliament have agreed to work together.

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Although we initially expected that the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) would be supported by the various macroeconomic data (inflation, trade balance, and manufacturing activity) that were released by Statistics Indonesia today, the opposite is what happened. The index went into red territory amid profit taking, although the bond market in fact strengthened and foreign investors recorded net buying at IDR 224 billion (USD $18.7 million).

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The number of air passengers in Indonesia will most likely fail to meet its growth target in 2014. Based on government data, the number of air passengers in Southeast Asia’s largest economy reached 47.5 million in the first eight months of 2014, a 5.82 percentage point growth from the same period last year. However, the Indonesia National Air Carrier Association (INACA) initially targeted annual passenger growth in the range of 12-15 percent for 2014. Amid slowing economic growth, people’s purchasing power has declined.

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The market showed today (27/10) that the composition of Indonesian President Joko Widodo’s cabinet did not live up to expectations. On Sunday afternoon, Widodo had announced the names of the ministers inside his Working Cabinet (Kabinet Kerja) after having delayed the announcement for almost a week as several of his ministerial candidates needed to be replaced having been red flagged by the country’s Corruption Eradication Commission (KPK). This then heightened expectations that Widodo’s cabinet would constitute a ‘dream team’.

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Indonesian stocks and the rupiah have rebounded on Friday due to several internal and external factors. During the first trading session on Friday (17/10), the benchmark stock index of Indonesia (Jakarta Composite Index, or IHSG) surged 0.94 percent to 4,998.14 points. Meanwhile, based on the Bloomberg Dollar Index, the Indonesian rupiah exchange rate had appreciated 0.26 percent to IDR 12,228 per US dollar by 12:30 pm local Jakarta time. Why do Indonesian stocks and the rupiah perform well on Friday?

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In line with global stock indices, the benchmark index of Indonesia (Jakarta Composite Index, abbreviated IHSG) declined on Thursday’s trading day. Falling indices on Wall Street were a major concern to global investors as weak corporate and economic data may indicate that the economic recovery of the USA is not as structural as previously assumed. The NY empire state manufacturing index, US retail sales, US chain store sales, and US business inventories all weakened and ‘infected’ Asian stock indices, including the IHSG.

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Despite the fact that foreign investors continued to record net selling (IDR 216.9 billion) and despite mostly declining stock indices in Southeast Asia, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) rose 0.19 percent to 4,922.59 points on Tuesday’s trading day (14/10). The IHSG was particularly supported by rising consumer and manufacturing stocks. Indonesian stocks were also supported by the appreciating rupiah exchange rate.

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Indonesian Finance Minister Chatib Basri said that the lower pace of economic growth in China, the world’s second-largest economy, is a major concern for Indonesia as it leads to declining demand for commodities (and thus places downward pressure on commodity prices). As Indonesia is a major commodity exporter - such as coal, crude palm oil, nickel ore and tin - the country feels the impact of weak global demand for commodities. About 60 percent of Indonesia’s exports are commodities, mostly raw ones.

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Indonesian stocks tumbled at the first trading day of the week as investors are still concerned about the condition of the global economy. Declining stock indices on Wall Street at the end of last week had a negative impact on Asian stock indices, including Indonesia’s benchmark stock index (known as the Jakarta Composite Index, or abbreviated IHSG). The IHSG fell 1.01 percent to 4,913.05, its lowest level since 4 July 2014, on Monday (13/10). Foreign investors recorded net selling of IDR 595 billion (USD $49.6 million).

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In line with the volatile performance of global stocks, led by indices on Wall Street, the benchmark stock index of Indonesia (Jakarta Composite Index, or abbreviated IHSG) showed a volatile performance over the past week. US stocks mostly declined - except for the sharp rebound on Wednesday after Federal Reserve minutes signalled no higher US interest rates anytime soon - on concerns about the global economy (particularly the Eurozone), looming higher US interest rates, and the appreciating US dollar (hurting US exports).

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