Indonesian companies engaged in the production of crude palm oil (CPO) recorded impressive financial figures in the first quarter of 2014. Combined, 13 CPO companies that are listed on the Indonesia Stock Exchange posted IDR 3 trillion (USD $260.9 million) in net profits over the first quarter of 2014, a 116.1 percentage growth from the same period last year. Main reasons for this growth are the sharply depreciated Indonesian rupiah exchange rate in combination with the rising global CPO price and looming new El Niño cycle.

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On 4 May 2014, 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 topics such as macroeconomic assumptions of the Indonesian government, April inflation, the March trade balance, April manufacturing, an update on the rupiah, the 2014 presidential election, and more.

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On Wednesday morning (30/04), the Indonesian rupiah exchange rate had appreciated 0.11 percent to IDR 11,536 per US dollar based on the Bloomberg Dollar Index at 9:15 local Jakarta time. On Tuesday (29/04), Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.18 percent to IDR 11,589 against the US dollar. Today's JISDOR will be released by the central bank of Indonesia around noon local Jakarta time.

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Based on the Bloomberg Dollar Index, the Indonesian rupiah exchange rate appreciated 0.23 percent to IDR 11,603 per US dollar on Thursday (24/04). The currency's performance was particularly influenced by weak new US single-family homes sales. These sales fell more than expected and hit a five-month low in February 2014, implying that there is continued weakness in the US housing market. Meanwhile, US durable goods orders and US initial jobless claims, which will be released later today, are expected to be weak too.

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The Indonesian rupiah exchange rate continued its recent weakening trend on Wednesday (23/04). Based on the Bloomberg Dollar Index, Indonesia's currency had depreciated 1.12 percent to IDR 11,650 per US dollar at 12:45 local Jakarta time, its weakest level in two months. Reasons for this poor performance are weak Chinese manufacturing data, renewed concerns about Indonesia's wide current account deficit and ongoing political uncertainty after the fragmented outcome of Indonesia's 2014 parliamentary election.

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The International Monetary Fund (IMF) praised the Indonesian government's policy approach to safeguard the country's financial stability amid external shocks in 2013 and hopes that the new government, which will be inaugurated in October 2014, continues the economic reform agenda. Changyong Rhee, Director of the IMF's Asia Pacific Department, said that Indonesia - Southeast Asia's largest economy - is currently on the right track and forecast to grow 5.4 percent in 2014, slightly lower than the 5.78 percentage growth in 2013.

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Car and motorcycle sales increased rapidly in Indonesia throughout March 2014, primarily due to an improved distribution network. In the previous months, heavy rains amid a peak of the rainy season (causing floods in various parts of Indonesia) resulted in the postponement of car and motorcycle purchases. Data from the Association of Indonesian Automotive Industries (Gaikindo) indicated that car sales surged 18 percent (year-on-year, yoy) to 113,277 units in March 2014, while motorcycle sales grew 9.2 percent (yoy) to 728,820 units.

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Investors were not happy to see the parliamentary election result of Indonesia on Wednesday (09/04). The fragmented outcome implies continued political uncertainty toward the July 2014 presidential election. None of the Indonesian political parties were able to secure a majority in the legislative election, meaning it will be more difficult to pursue a clear and steady political course over the next five years. The PDI-P, which was forecast to secure an impressive victory on the 'Jokowi effect', was unable to record a large victory.

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Most emerging currencies in Asia appreciated against the US dollar on Monday (07/04) as the 192,000 jobs that were added by US employers in March 2014 are believed to be too low to trigger an early interest rate hike by the US Federal Reserve. The new jobs data did not meet expectation, particularly after the strong US private jobs report. Meanwhile, trading in Asia was subdued as China's financial markets were closed (due to the Qingming Festival also known as Tomb Sweeping Day).

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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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Both the Indonesian rupiah exchange rate and stocks continued to fall on Tuesday (06/01) as global conditions remained unconducive. Indices on Wall Street had declined sharply yesterday as the global oil prices fell below USD $50 per barrel fueling concerns about a weaker global economy. Similarly, most Asian stock indices declined as Japan's yen appreciated and energy stocks were sold by investors. Indonesia’s benchmark Jakarta Composite Index fell 0.98 percent to 5,169.06 points.

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Indonesia’s rupiah exchange rate and stocks opened stable on Wednesday (17/12) after two days marked by severe pressures on emerging market assets. By 11:30 am local Jakarta time, Indonesia’s rupiah was down 0.09 percent to IDR 12,736 per US dollar (according to the Bloomberg Dollar Index), while Indonesian stocks were up 0.41 percent by the same time. Yesterday, the rupiah nearly touched IDR 13,000 per US dollar (its lowest level since the Asian Financial Crisis in 1997-1998), before the central bank decided to support the currency.

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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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Contrary to the previous trading day, most emerging Asian currencies strengthened against the US dollar on Tuesday (09/12) supported by the yen’s advance as falling oil prices dented risk appetite. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.47 percent to IDR 12,331 per US dollar today. Despite local firms’ increased US dollar demand to settle debt before the year-end, market participants were happy to learn that Indonesia’s central bank is active in the foreign exchange market to guard the currency.

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Despite positive stock indices in the USA and Europe at the end of last week as well as mostly positive indices in Asia today (08/12), the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) fell due to investors’ appetite for profit taking. Several matters made investors decide to sell their Indonesia shares, including the World Bank’s downward revision of Indonesia’s economic growth in 2015, Japan’s recession, weakening Chinese exports, and the sharply depreciating rupiah exchange rate.

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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 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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