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Despite rising Asian stocks on Thursday morning (04/01), supported by higher crude oil prices, surging Japanese shares, and US Federal Reserve minutes that show policy makers agree to a "gradual approach" in terms of further monetary tightening, Indonesia's benchmark Jakarta Composite Index is expected to remain under pressure today.
Bank Indonesia, the central bank of Indonesia, left its benchmark interest unchanged at the final (regular) policy meeting of 2017. The BI 7-day Reverse Repo Rate was kept at 4.25 percent on Thursday (14/12). Meanwhile, the deposit facility and lending facility were kept at 3.50 percent and 5.00 percent, respectively (effective per 15 December 2017).
Approaching the Federal Open Market Committee (FOMC) meeting - scheduled for 12-13 December 2017 - the Indonesian rupiah exchange rate remained stable on Monday (11/12). By 15:00 pm local Jakarta time, the rupiah had strengthened 0.01 percent to IDR 13,548 per US dollar (Bloomberg Dollar Index). However, several analysts warn that the rupiah is likely to depreciate if the US Federal Reserve will indeed raise its benchmark interest rate.
As we are in the middle of the fourth quarter of 2017, we detect rising pressures on the Indonesian rupiah exchange rate amid broad US dollar strength. However, the decision of Indonesia's central bank to leave its interest rate regime unchanged at the November meeting managed to give some support to the rupiah (as well as Indonesia's improving balance of payments, current account deficit, and capital and financial account).
The Indonesian rupiah appreciated slightly - by 0.09 percent - to IDR 13,464 per US dollar (Bloomberg Dollar Index) on Thursday (05/10), bucking the trend in Asia where most emerging market currencies weakened amid US dollar strength as US economic data showed that the US service sector grew at its fastest pace in 12 years in September 2017.
The Indonesian rupiah is continuing to depreciate on Monday (02/10). By 15:00 pm local Jakarta time the currency had weakened 0.71 percent to IDR 13,568 per US dollar (Bloomberg Dollar Index). Not only the rupiah, but all (emerging market) currencies are sliding in Asia on renewed US dollar strength.
Indonesian shares and the rupiah strengthened considerably on the last trading day of the week. On Friday (29/09) Indonesia's benchmark Jakarta Composite Index surged 1.02 percent to 5,900.85 points, outperforming all other national benchmark indices in the Asia-Pacific region. Meanwhile, the Indonesian rupiah appreciated 0.32 percent to IDR 13,472 per US dollar (Bloomberg Dollar Index).
The US dollar is advancing on Thursday (28/09) amid strong US dollar demand on the back of US President Donald Trump's tax reform program announcement and looming further monetary tightening by the Federal Reserve before the year-end. Rising US treasury yields naturally cause US dollar strength, hence leading to weakening emerging market currencies, with especially the Indonesian rupiah being affected significantly today.
Investors are again in search of safe haven assets on Wednesday (27/09), hence most emerging market currencies, including Indonesia's rupiah exchange rate, are weakening against the US dollar. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.28 percent to IDR 13,412 per US dollar by 14:45 am local Jakarta time. Yesterday, the rupiah had already weakened 0.37 percent against the greenback.
On Wednesday (06/09) Asian stocks are following the example of Wall Street's slide overnight. The benchmark MSCI Asia was down 0.66 percent by 10:15 am local Jakarta time on Wednesday morning. This weak performance is attributed to persistent concerns about North Korea's provocative behavior, while any non-violent sanctions against North Korea will unlikely encourage the nation to stop its nuclear program.
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After setting a new record last Friday, Indonesia's main stock index (IHSG) lost its strength on Monday (13/05/13). A number of factors were behind the decline. Foreign investors mostly sold their Indonesian assets as the record high level of the IHSG made it tempting to engage in profit taking. Moreover, the still unclear policy regarding Indonesia's subsidized fuel causes uncertainties. Lastly, Asian stock indices were mixed while European indices opened lower on Monday.
The Indonesia Stock Index (IHSG) fell victim to large profit taking on Thursday's trading day (02/05/13) after having set a new record yesterday. Market players are probably concerned about the 'May Cycle' which refers to the traditional fall of the IHSG in the month of May. But negative market sentiments were particularly brought on by Standard & Poor’s revised outlook on Indonesia’s BB+ rating from positive to stable. It triggered a 1.32 percent correction in Indonesia's stock index.
On Friday's trading day, the Indonesia Stock Index (IHSG) started in an upward direction. However, as it felt the impact of European stock indices, that mostly opened lower, the IHSG weakened 0.32 percent to 4,978.51 points. Moreover, most other Asian indices were down (except for Hong Kong's HSI) and thus contributed to the IHSG's fall. Market participants also seem to fear the annual 'May Cycle' of the IHSG, which involves the traditional large-scale selling of IHSG stocks.
Rising American and European stock indices last Friday, helped to support Asian stock indices today (22 April 2013), including the Indonesia stock index (IHSG). However, the ongoing drama brought on by last Saturday's earthquake in China, impacted on the China stock index as well as on other Asian stock indices, including the IHSG. As the IHSG has been showing signs that it is overbought, market participants preferred to sell portions of their stock portfolios, resulting in a limited fall of the IHSG.
Although most Asian stock indices went up on Wednesday (10 April 2013), the Indonesia Stock Exchange (IHSG) could not cling on to their movement. In fact, even the main index of South Korea, a country plagued by political tensions, reported a rise. The IHSG was not able to follow suit due to investors' profit taking. Foreign market participants recorded a net sell, particularly Indonesia's blue chip stocks, which caused the index to end at 4,877.48, a 0.45 percent fall.
On Monday, the Dow Jones Index gained as corporate results of Q1-2013 are estimated to be good. This subsequently had a positive impact on Asian stock indices on Tuesday, including Indonesia's main index (IHSG). Moreover, positive news from both Australia and China were well-received as well as the higher metal price (reflected by Hong Kong's rising Hang Seng Index). Amid this positivity, investors took the opportunity to enlarge their stock portfolios.
Last week Friday, American stock markets were not able to maintain a positive trend due to Nonfarm Payrolls that increased below expectation. Moreover, concerns about a spreading bird flu epidemic in China in combination with increased political tensions in Korea impacted on Monday's trading day (8 April 2013) of the Indonesia Stock Exchange (IHSG). The index had to absorb a sell-off, thus closing lower to 4,897.52, an 0.58 percent decline.
The rise of the Indonesia Stock Exchange (IHSG) at the start of today's session was not sustained. It disappointed market participants who were hoping that Indonesia's main index would continue its upward movement supported by strengthening American and European stock indices after it became known that Cyprus will stay in the Euro-zone and the Federal Reserve will continue its bond-buying program.
Despite global concerns, the bailout issue in Cyprus did not push Asian stock markets - including the Indonesia Stock Exchange (IHSG) - further in a downward spiral. From today's rebound of Asian stock indices we can conclude that market participants were optimistic after the meeting of the Cyprus parliament. Previously, panic emerged as imposition of fees to depositors was announced, although it is still planning only and not in effect yet.
On Thursday's trading day, the Indonesia Stock Exchange (IHSG) was tame and weakened again. Foreign market participants were mostly selling their Indonesian assets and influenced domestic investors to behave similarly. Most other Asian stock markets, however, turned positive and were followed by good European openings. It did not prevent the IHSG from losing 49.07 points, or 1.01 percent to 4,786.37. Trade volume increased, while total value of transactions decreased.
