The latest survey of Bank Indonesia shows that consumer confidence in Indonesia has fallen in June 2015 on fears of shrinking job availability as well as declining income and business activity. Last month, the central bank’s Consumer Confidence Index fell 1.5 points to 111.3. This year so far, Indonesian consumer confidence only rose in May. In other months the index fell. Bank Indonesia’s Consumer Confidence Index is based on samples of 4,600 households in 18 major cities in Indonesia (100 separates optimism from pessimism).

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On 1 July 2015, Bank Indonesia’s BI Regulation No. 17/3/PBI/2015 regarding the Mandatory Use of the Rupiah in Indonesia came into effect. This BI Regulation, signed on 31 March 2015, restricts the use of foreign currencies in transactions conducted in Indonesia with the aim to deepen the domestic rupiah market, stabilize the rupiah (which has been depreciating against the US dollar), and foster economic expansion. A previous law (Law No. 7/2011) allowed for involved contract parties to agree using another currency (than the rupiah) for payments.

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Eric Sugandi, Chief Economist at the Standard Chartered Bank, expects Indonesia’s rupiah to have depreciated to IDR 13,900 per US dollar by the end of the year from IDR 13,339 currently (29/06) due to the impact of the bullish US dollar ahead of monetary tightening in the USA and the looming Greek exit from the Eurozone. Actually, this is a conservative prognosis. In case Indonesia’s central bank does not raise its benchmark interest rate (BI rate), currently at 7.50 percent, pressures on the rupiah may increase in fact increase further.

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Although Indonesia is considered as one of the Asian economies that is particularly vulnerable to a Greek exit from the euro (‘Grexit’), Indonesian stocks and the rupiah did not decline as heavily as other emerging market assets on Monday’s trading day (29/06), the first trading day after the collapse of talks between debt-ridden Greece and its international creditors. Indonesia’s benchmark Jakarta Composite Index fell 0.82 percent to 4,882.59 points while the rupiah depreciated 0.24 percent to IDR 13,339 per US dollar (Bloomberg Dollar Index).

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Indonesian stocks are expected to feel heavy downward pressure on Monday (29/06) due to stalled talks between debt-ridden Greece and its international creditors. Indonesia’s benchmark stock index (Jakarta Composite Index) still needs to open but other Asian markets immediately plunged after opening. Japan’s Nikkei 225 was down 2.28 percent as the yen appreciates (investors are chasing safe haven assets), while South Korea’s KOSPI fell 1.5 percent. Meanwhile, the euro is depreciating heavily in Asian trading.

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Most stock indices across the world continued to fall on Friday (26/06) on heightened concern that debt-ridden Greece will fail to reach an agreement with its international creditors. The deal is necessary for Greece to obtain bailout funds in order to avoid a default on its debt to the International Monetary Fund (IMF) due on 30 June 2015. A default could mean a Greek exit (Grexit) from the Eurozone and jeopardizes stability of the whole financial system of the region. Talks between both sides will continue into the weekend.

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As Greece and its international creditors have failed to reach an agreement (yet) regarding the disbursement of crucial bailout funds for the debt payment of debt-ridden Greece to the International Monetary Fund (IMF) later this month, most Asian stocks fell on Thursday (25/06) in cautious trading. Indonesia’s benchmark stock index (Jakarta Composite Index) fell 0.68 percent to 4,920.04 points, while the rupiah depreciated 0.20 percent to IDR 13,328 per US dollar according to the Bloomberg Dollar Index.

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On Tuesday (23/06) Asian stock indices extended gains on optimism that debt-ridden Greece will not default and stays within the Eurozone. Although Eurozone leaders reminded that there is still work to be done before an agreement can be reached between Greece and its creditors, markets are confident that the deal is only a matter of time. However, similar to yesterday, Indonesia’s benchmark stock index did not follow this global positivity and instead declined 0.44 percent to 4,937.65 points.

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Contrary to the performance of most other Asian stock indices, Indonesia’s benchmark Jakarta Composite Index fell 0.52 percent to 4,959.25 points on Monday (22/06). Other Asian markets were supported by renewed hopes of averting a Greek exit (Grexit) from the Eurozone after the debt-ridden country gave new proposals to its creditors in the Eurozone over the past weekend. According to the Greek government these proposals are mutually beneficial. Ahead of the ‘emergency’ meeting today, the euro and European stocks tend to rise heavily.

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Indonesian stocks rebounded on Tuesday (16/06). The country’s benchmark Jakarta Composite Index rose 0.72 percent to 4,872.60 points supported by foreign net buying and rebounding from yesterday’s 13-month low position. Middle and longer term investors now have great opportunity to find stocks at bargain prices (particularly those stocks that are not too exposed to the weakening rupiah). However, trading volume was low at about 60 percent of the past 30-day average thus indicating that market participants remain wary.

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Although Indonesian Finance Minister Chatib Basri provided positive news to the market by stating that the country's trade deficit (and co-related current account deficit) will probably not be as large in the second quarter of 2014 (as compared to the same quarter in 2013) as well as an expected increase in Indonesian banks' consumer credit, the benchmark stock index (known as Jakarta Composite Index or IHSG) was unable to rise on Wednesday's trading day (04/06). Particularly local investors were eager to sell their Indonesian shares.

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The Indonesian rupiah exchange rate continued to depreciate further on Wednesday (04/06). According to the Bloomberg Dollar Index, the currency of Indonesia had weakened 0.38 percent to IDR 11,855 per US dollar by 15:00pm local Jakarta time. The depreciation occurred due to US dollar demand from local importers for payments and renewed concern about the country's trade balance. Today's performance of the rupiah is in line with the performance of other Asian currencies as investors return to the US dollar on higher US yields.

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Supported by enthousiastic foreign investors, the benchmark stock index of Indonesia (Jakarta Composite Index or also known as IHSG) managed to climb 0.61 percent to 4,942.16 points on Tuesday (03/06). Particularly consumer, trade and mining stocks were popular on today's trading day. It is interesting to note that this growth happened amid sharp rupiah depreciation as the currency still feels the negative impact of the USD $1.97 billion April 2014 trade deficit that was released yesterday (02/06).

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Although initially the benchmark stock index of Indonesia (known as Jakarta Composite index or IHSG) fell after the market responded to today's release of Indonesia's April trade deficit and May inflation, the index ended in the green zone due to foreign net buying and general positive Asian indices (influenced by higher stock indices on Wall Street at the end of last week). Particularly Indonesia's big cap stocks in the miscellaneous industry and consumer sectors were popular as these were relatively cheap after having tumbled at the end of last week.

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The Indonesian rupiah exchange rate depreciated 0.77 percent to IDR 11,766 per US dollar on Monday (02/06) based on the Bloomberg Dollar Index. From the start of trading the currency of Southeast Asia's largest economy immediately plummeted as market participants anticipated a trade deficit in April 2014. Last Friday, the central bank of Indonesia (Bank Indonesia) announced that it expects Indonesia to post a deficit in April, whereas earlier statements of the central bank had mentioned a slight surplus.

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Asian stocks declined on Friday's trading day (30/05) after a government report showed that the US economy - the world's largest economy - shrank by one percent (year-on-year) in the first quarter of 2014, the country's first contraction since early 2011. The contraction was far worse than the initial forecast at 0.1 percent. The main cause of the contraction was the severe winter that hit the USA. The benchmark stock index of Indonesia (Jakarta Composite Index) fell 1.84 percent to 4,893.91 points on Friday (30/05).

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Based on Bank Indonesia's benchmark rupiah exchange rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR), the Indonesian rupiah exchange rate depreciated 0.44 percent this week. Although Asian currencies have been largely supported by renewed capital inflows as investors are optimistic that central banks across the globe continue to provide stimulus to boost local economies, the rupiah has been under pressure due to various domestic issues. These issues include politics as well as fuel subsidies.

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The Indonesian rupiah exchange rate continued its recent depreciating trend on Wednesday (28/05). According to the Bloomberg Dollar Index, the currency had depreciated 0.46 percent to IDR 11,633 against the US dollar at the end of the trading day. The rupiah's performance is in line with the general trend in Asia where most currencies lost ground to the greenback on today's trading day. As various US economic data indicate a continued recovery of the US economy, the market expects more US monetary tightening.

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The Indonesian rupiah exchange rate continued to depreciate further on Monday’s trading day (26/05). Based on the Bloomberg Dollar Index, the currency of Indonesia had depreciated 0.17 percent to IDR 11,595 per US dollar by 1pm local Jakarta time. On Monday morning the US dollar was strengthening against most emerging currencies in Asia. Meanwhile, the central bank's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.63 percent to IDR 11,633 against the US dollar.

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On the last trading day of the week, the benchmark stock index of Indonesia (known as the Jakarta Composite Index of IHSG) rose 0.06 percent to the level of 4,973.06 points. Trading volume was low as investors are still carefully monitoring political and economic developments in Indonesia. Earlier in the week, political uncertainty increased when the country's second-largest political party (Golkar) decided to join the coalition that supports the Prabowo Subianto and Hatta Rajasa pair in the July presidential election.

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