The Indonesian rupiah depreciated sharply, while the country’s stocks fell. According to the Bloomberg Dollar Index, Indonesia’s currency depreciated 0.86 percent to IDR 13,148 per US dollar on Thursday (07/05). This performance was in line with the performance of other Asian currencies. Of the 11 Asian currencies that are followed by Bloomberg, only Japan’s yen appreciated against the US dollar. The Indian rupee was the worst performer today, weakening 1.06 percent against the greenback.

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Indonesian stocks continued to fall today (30/04). After the first trading session, Indonesia’s benchmark Jakarta Composite Index fell 0.11 percent to 5,099.83 points. The index was negatively affected by yesterday’s weakening stock indices in the USA and Europe. These indices experienced a correction due to mixed signals stemming from the latest US Federal Reserve’s FOMC meeting. Contrary to its March policy statement, the Fed did not rule out hiking rates at the next meeting. However, it also downgraded the US growth outlook.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) is again plagued by selling pressures on Wednesday’s trading day (29/04). After today’s first trading session the index was down 2.58 percent to 5,106.73 points. The decline is caused by the persistence of the negative sentiments that have been felt over the past couple of days (explained below) coupled with a discrepancy in economic growth forecasts between the Indonesian government and the country’s central bank (Bank Indonesia).

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Indonesian stocks continue to fall on today’s trading day (28/04). After having declined 3.49 percent yesterday, the benchmark Jakarta Composite Index fell a further 1.00 percent during the first trading session on Tuesday. Investors, particularly foreign ones, are still concerned about weak first quarter financial results of listed Indonesian companies, signalling that the country’s economic growth in Q1-2015 will be disappointing too. Furthermore, the market is waiting for results of the Federal Reserve’s two-day policy meeting which is set to start today.

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Indonesian stocks fell sharply after the market opened on Monday (27/04). Indonesia’s benchmark Jakarta Composite Index had dropped 2.61 percent to 5,293.73 points by 12:00 local Jakarta time. This poor performance is most likely due to market participants wait & see attitude before the release of Indonesia’s Q1-2015 GDP growth figure (to be released at the start of May) and the release of Indonesian companies’ Q1-2015 financial earnings reports. Moreover, Indonesia will soon execute several foreign convicted drug traffickers.

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Over the past week the Indonesian rupiah depreciated 0.60 percent to IDR 12,941 per US dollar (Jakarta Interbank Spot Dollar Rate). At the start of the week the rupiah experienced severe pressure as market participants were concerned about Indonesia’s slowing economic growth. However, in the second half of the week, Indonesia’s currency somewhat improved as the US dollar was negatively affected by weak US economic data. Based on the Bloomberg Dollar Index, the rupiah finished at IDR 12,922 per US dollar on Friday (24/04).

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Per May 2015 the government of Indonesia will offer tax breaks to companies that export a minimum of 30 percent of their production. Earlier this month, Indonesian President Joko Widodo signed a package that includes the tax break for exporters as well as a tax break for multinational companies that are willing to re-invest profits in Indonesia instead of sending profits and dividends to shareholders abroad. This package is designed to improve Indonesia’s trade balance (and the related current account balance).

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The central bank of Indonesia (Bank Indonesia) announced that the country’s foreign exchange reserves fell by USD $3.9 billion to USD $111.6 billion at the end of March 2015 as the central bank used part of the forex reserves to support the Indonesian rupiah which had started to depreciate markedly due to bullish US dollar momentum amid further looming monetary tightening in the USA. The rupiah had fallen to a 17-year low of IDR 13,237 per US dollar in mid-March as market players are anticipating an interest rate hike in the USA.

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Minutes of the Federal Reserve’s latest FOMC meeting (17-18 March), released Wednesday (08/04), show that the US central bank is divided about the timing of higher US interest rates. Several policymakers would approve such an interest rate hike in June 2015, while others would prefer to see rates increase later this year or even next year as they consider that the US economy is still not strong enough yet. However, when reading the minutes there are some signs suggesting that the institution is on course to raise its key rate this year.

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Indonesian stocks and the rupiah are performing well on Monday’s trading day (06/04) after weak US economic data suggests that the US central bank (Federal Reserve) will still refrain from raising its key interest rate too soon. Weaker-than-expected US jobs data caused that most Southeast Asian stock markets strengthened today. Moreover, the rupiah also felt the positive impact. According to the Bloomberg Dollar Index, the rupiah had appreciated 0.54 percent to IDR 12,950 per US dollar by 15:17 pm local Jakarta time.

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Higher American indices after the release of ADP employment change and lower initial jobless claims made an indirect impact on Asian stock indices, including Indonesia's main stock index (IHSG) on Thursday (04/07). Investors used the positive outcomes of these data to start purchasing stocks, although in limited quantities. Foreign investors, however, are still selling more Indonesian shares than they buy, which subsequently results in limited growth of the IHSG on Thursday (04/07). The index grew 0.10 percent to 4,581.93.

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For the third day in a row, Indonesia's main stock index (IHSG) made a strong upward jump on Friday (28/06). Supported by strong American and European stock indices on the previous trading day, the IHSG rose 3.06 percent to 4,818.90 points. American and European indices mostly rose on Thursday (27/06) due to various positive macroeconomic data from the USA. These economic data translated into the good performance of the IHSG and other Asian stock indices on Friday. All sectoral indices of the IHSG were reported to have grown.

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Stock indices in the United States were up for the third day in a row on Thursday (27/06). Main reason for this upward trend are various positive macroeconomic figures from the USA. The number of homes under contract to be sold (excluding new construction) grew 6.7 percent in May, while analysts had forecast growth of about 1 percent from the previous month. Personal spending, which accounts for about 70 percent of the domestic economy, grew 0.3 percent in May, while personal income rose 0.5 percent.

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Asian stock indices were up on Thursday (27/06) after economic growth of the United States in Q1-2013 was lower than expected. Paradoxically, this had a positive effect on global stock indices as speculation arose that the disappointing growth rate would convince the Federal Reserve to continue its quantitative easing program. It also had a good affect on Indonesia's main stock index (IHSG), which gained 1.92 percent and ended at 4,675.75. The index was well on its way to close a gap (at 4,743-4,801) but was blocked by mixed European openings.

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The main stock index of Indonesia (IHSG) fell 0.24 percent to 4,418.87 on Tuesday (25/06) as foreign investors continued to sell parts of their Indonesian stock portfolios. In fact, after selling USD $68 million worth of stocks on Tuesday, foreign investors have now sold more stocks than they bought in 2013. From its record high of 5,214 on 20 May 2013, the IHSG has now fallen 15 percent. After the speech of Ben Bernanke one week ago (19/06), investors have been pulling out money from emerging markets, including Indonesia.

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After several years of significant foreign capital inflows into Indonesia, a sharp contrast has been visible in recent weeks. Global panic that followed in the days after Ben Bernanke announced that the Federal Reserve intends to withdraw its quantitative easing program in 2014 (if economic recovery of the USA continues), hit Indonesia hard. It triggered a massive capital outflow from the country's stock exchange (IDX) as well as from government securities (Surat Berharga Negara, or SBN).

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Similar to the Jakarta Great Sale event, Indonesia's main stock index (IHSG) trades its stocks at low prices as foreign investors have sold large parts of their Indonesian stock assets in recent weeks. Last week, foreign investors sold IDR 4.9 trillion (about USD $492.4 million), meaning that this year's accumulated foreign net buying has evaporated. Will these sales continue? Yes, I think so. Foreigners have invested about IDR 144 trillion in Indonesia's capital markets between 2007 and Q1-2013. As such, there is still plenty to sell.

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On Friday's trading day (21/06), Indonesia's main stock index (IHSG) was still under the spell of the unrest that emerged because of Ben Bernanke's announcement of a possible stop to the Federal Reserve's quantitative easing program in 2014. Moreover, weak manufacturing data from China also continued to cause negative market sentiments. The IHSG fell 2.48 percent to 4,515.37, its lowest closing since 11 February 2013. Foreign investors sold about USD $228 million more stocks than they bought.

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Concerns about an ending to the Federal Reserve's quantitative easing program and falling industrial activity in China as well as China's credit crisis made many investors decide to sell assets on stock markets around the world on Thursday (20/06). Indonesia's main stock index (IHSG) was just one of the many victims of this global unrest. The index weakened 3.68 percent to 4,629.99 points as foreign investors mostly sold their Indonesian assets, resulting in significant lowered share prices of Indonesia's big cap companies.

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On Wednesday (19/06), Indonesia's main stock index (IHSG) posted a 0.70 percent fall to the level of 4,806.66 points as foreign investors continued to sell more Indonesian stocks than they bought. Moreover, the IHSG did not receive any support from the Asian region, where most stock indices weakened. Similar to Europe and the United States, Asian markets were eagerly waiting for results of the meeting of the Federal Reserve on Wednesday evening and thus mostly refrained from trading during the day.

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