On 2 March 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 matters such as the G20 meeting in Sydney, foreign investment, Inflation, rupiah exchange rate performance, economic growth, ANTV's IPO, natural disasters, the presidential election, and more.

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Based on the Bloomberg Dollar Index, the Indonesian rupiah exchange rate appreciated 0.15 percent to IDR 11,647 per US dollar on Wednesday (26/02). All through the day, the currency traded within a fairly narrow trading range, possibly due to market participants' wait and see attitude ahead of the release of important US economic indicators. As the US economy is improving and the US unemployment rate is declining, the Federal Reserve may wind down its quantitative easing program in a more aggressive manner soon.

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The Indonesian rupiah exchange rate depreciated 0.14 percent to IDR 11,665 per US dollar on Tuesday (25/02) based on the Bloomberg Dollar Index. The currency's depreciation was due to US dollar demand from Indonesian importers while offshore funds engaged in profit taking as the rupiah is the best performer in February 2014 among 31 major currencies tracked by Bloomberg (against both the euro and US dollar). The rupiah is also the best-performing Asian currency this year so far.

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Indonesia's national car industry is expected to contribute IDR 44 trillion (USD $4 billion) to the country's total exports in 2014 through the export of completely built units (CBU), completely knock down units (CKU) and automotive spare parts. Exports of CBUs are estimated to rise more than 18 percent to 200,000 units in 2014, supported by increased domestic production capacity, according to Budi Darmadi, an official at Indonesia's Ministry of Industry. Darmadi declined to estimate exports of CKUs and spare parts this year.

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On 16 February 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 matters such as Bank Indonesia's benchmark interest rate, the rupiah exchange rate, tourism, trade balance, the eruption of Mount Kelud, cement sales, an update on the MP3EI, and more.

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Indonesia's rupiah exchange rate continues its sharp appreciation on Valentine's day (14/02). Based on the Bloomberg Dollar Index, the currency was up 0.80 percent to IDR 11,880 per US dollar at 9:56 local Jakarta time. Yesterday (13/02), the rupiah had recorded a 0.89 pecent gain. This recent appreciating trend of the rupiah is caused by international investors' renewed confidence in Indonesia's macroeconomic fundamentals. Particularly the improvement in the country's current account deficit is well received by investors.

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On 9 February 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 matters such as an analysis of economic growth in 2013, the trade balance, new IPOs on the stock exchange, an update on January 2014 inflation, and more.

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Credit growth in Indonesia's banking sector in 2014 is estimated to range between 17 and 18 percent. This estimation is higher than the central bank's target of 15 to 17 percent but lower than credit growth in 2013. According to Indonesia's Financial Services Authority (Otoritas Jasa Keuangan, OJK), this pace of growth is at a safe level. Third party funds are projected to grow 16 to 16.5 percent, while the OJK did not provide an estimation of the loan to deposit ratio (LDR) yet although it did say that the LDR was at a safe level too.

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Indonesian stocks and the country's currency feel the negative impact of the further winding down of the Federal Reserve's bond-buying program (quantitative easing). Yesterday (29/01), it was announced that the Fed will cut the bond-buying program by USD $10 billion to USD $65 billion per month. Among market participants concern emerged about the stability of emerging economies amid the tapering as capital outflows are expected. After opening, the benchmark stock index of Indonesia (IHSG) immediately fell more than 1 percent.

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On Wednesday (29/01), the Federal Reserve (Fed) announced to cut its massive bond-buying program (quantitative easing, QE) by another USD $10 billion after the FOMC meeting, while maintaining interest rates close to zero. Originally, the Fed's QE program, implemented in September 2012, totalled USD $85 billion per month but after the cuts in December 2013 and January 2014, it is now wound down to USD $65 billion per month and if the pace of tapering continues, the program might be over by the end of 2014.

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After a promising start of the day, the rupiah exchange rate and Indonesian stocks lost all of their earlier gains ahead of closing on Monday day (19/05). Around 10:00 local Jakarta time, the rupiah rate appreciated more than 0.60 percent to IDR 11,346 per US dollar on speculation that Jusuf Kalla would be nominated as Joko "Jokowi" Widodo's running mate in the presidential election (9 July 2014), backed by a coalition consisting of the PDI-P, NasDem, PKB and Hanura. After the official declaration, however, the currency lost all of its earlier gains.

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The week ended well for both the Indonesian rupiah exchange rate and the benchmark Jakarta Composite Index (IHSG). Based on the Bloomberg Dollar Index, the rupiah appreciated 0.30 percent to IDR 11,413 per US dollar at the end of Friday's trading day (16/05). Meanwhile, the IHSG surged 0.80 percent to finish just above the psychological level of 5,000 points. The good performance was supported by investors' positive response towards the latest political developments in Indonesia.

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The government of Indonesia will submit a new draft proposal for the 2014 Revised State Budget (APBN-P 2014) on 20 May 2014. Of the seven basic macroeconomic assumptions in the 2014 State Budget (APBN 2014), three assumptions are proposed to be revised. These involve general economic growth, the Indonesian rupiah exchange rate, and crude oil lifting. The government felt that the assumptions need a revision as results in the first quarter of 2014 have not been up to expectation.

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The benchmark stock index of Indonesia - known as the Jakarta Composite Index or IHSG - rose 0.17 percent to 4,921.39 points on Tuesday (13/05), impacted by investors' reaction to positive earnings reports of Indonesian coal miners in the first quarter of 2014. Today, foreign investors recorded net buying of IDR 64 billion (USD $5.6 million) and accounted for 31 percent of trading activity. However, investors remain cautious ahead of the presidential election that is scheduled for 9 July 2014 and wait for more clarity about the (vice) presidential candidates that will compete.

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ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the April 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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While most emerging Asian currencies fell, the Indonesian rupiah exchange rate appreciated 0.08 percent to IDR 11,523 per US dollar based on the Bloomberg Dollar Index on Monday (12/05). The depreciating Chinese yuan, after its central bank set the midrate at its lowest level in eight months, put pressure on other Asian currencies. Today, Indonesia's Finance Ministry sold IDR 10 trillion rupiah (USD $867 million) of bonds, higher than the indicative target of IDR 8 trillion rupiah. Meanwhile, Indonesia’s two-year bonds gained.

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The central bank of Indonesia (Bank Indonesia) decided at today’s Bank Indonesia Board of Governors’ Meeting, convened on 8 May 2014, to maintain the country's benchmark interest rate (BI rate) at 7.50 percent, with the Lending Facility rate and Deposit Facility rate held at 7.50 percent and 5.75 percent respectively. This policy is consistent with efforts to steer the rate of inflation towards its 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.

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Completely opposite to our expectations, the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) managed to climb 0.57 percent to 4,862.02 points on Wednesday (07/05). The gain was unexpected as there were no clear factors that could provide positive market sentiments. Moreover, today's Asian stock indices were mostly down. Coincidence or not, tomorrow Bank Indonesia will announce whether its benchmark interest rate (BI rate) - currently set at 7.50 percent - will be changed or maintained.

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Indonesian Finance Minister Chatib Basri said that the country's economic growth in 2015 is targeted in the range of 5.5 to 6.3 percent. Amid further Federal Reserve tapering and possible interest rate hikes in the world's largest economy, chances of capital outflows from emerging markets (including Indonesia) are becoming larger. Basri said that these global conditions impact on GDP growth, the Indonesian rupiah exchange rate and inflation. Therefore, 2015 is a transition year, reflected by tighter economic projections and state spending.

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At the end of Friday’s trading day (02/05), the Indonesian rupiah exchange rate appreciated 0.32 percent to IDR 11,525 per US dollar based on the Bloomberg Dollar Index. The rupiah performed better than most of its regional emerging peers as inflation and trade data, which were released today by Statistics Indonesia, provided positive market sentiments. Indonesian inflation eased to 7.25 percent (year-on-year) in April 2014, from 7.32 percent a month earlier. Meanwhile, the country posted a trade surplus of USD $673 million in March 2014.

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