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Latest Reports Bank Indonesia
The central bank of Indonesia (Bank Indonesia) announced that the nation's foreign exchange reserves stood at USD $124.9 billion at the end of April 2018, down from USD $126.0 billion one month earlier. This decline is in line with expectations as the central bank had already confirmed it is intervening in the market to defend the Indonesian rupiah amid broad-based US dollar strength.
Indonesia Investments expects to see Bank Indonesia raising its benchmark interest rate at least once in 2018 in order to relieve pressures on the Indonesian rupiah. Rising expectations that the US Federal Reserve will implement four interest rate hikes in 2018, while the 10-year US treasury yield passed beyond the 3 percent line, have resulted in major pressures on emerging market assets, including Indonesia's rupiah and stocks.
Indonesia's Jakarta Composite Index continued to be plagued by a sell-off on Thursday (26/04) after already having fallen 2.40 percent on the preceding trading day. Today the benchmark index of Indonesia plunged another 2.81 percent to 5,909.20 points amid climbing US treasury yields (passing beyond the psychological boundary of three percent).
The central bank of Indonesia (Bank Indonesia) expects the nation’s trade balance to swing into surplus in March 2018, after recording two monthly trade deficits in January and February (USD $756 million and USD $116 million, respectively), as pressures from imports of raw materials and capital goods are seen sliding. Incumbent Bank Indonesia Governor Agus Martowardojo said a USD $1.1 billion surplus is possible in the third month of 2018, implying the trade balance would show a surplus, overall, in the first quarter of 2018.
Indonesia's foreign exchange reserves fell from a record high of USD $131.98 billion at the end of January 2018 to USD $128.06 billion at the end of February 2018. In a statement released on its official website, the central bank of Indonesia (Bank Indonesia) attributed the decline in reserve assets is to the use of foreign exchange to repay government external debt as well as efforts to stabilize the Indonesian rupiah exchange rate.
Indonesian President Joko Widodo threw his support behind Perry Warjiyo for the position of central bank governor in the 2018-2023 period. Over the weekend Widodo stated that Warjiyo is his sole nominee for the key function at the nation's central bank (Bank Indonesia). The five-year term of incumbent Bank Indonesia Governor Agus Martowardojo will end in May 2018.
The central bank of Indonesia (Bank Indonesia) is expected to leave its interest rates regime unchanged at the monthly policy meeting in February (14-15 February 2018) amid (expectations of) tighter monetary policies in the United States (USA), European Union (EU) and Japan.
The five-year term of Bank Indonesia Governor Agus Martowardojo will end on 22 May 2018 and therefore it is time to take a look at his potential successors. However, it could very well be that Martowardojo is allowed to have a second five-year term as central bank chief.
Bank Indonesia, the central bank of Indonesia, again emphasized that it will sanction those payment system operators and financial technology operators in Indonesia (both bank and non-bank institutions) that facilitate transactions using virtual currency, such as the Bitcoin, Ethereum, Dash, Litecoin and Ripple (also known as cryptocurrencies).
Indonesia's current account balance is expected to show a deficit for the next five years. The central bank of Indonesia (Bank Indonesia) does not rule out a surplus within that period but it would require some serious work in terms of structural reform-making. Indonesia started to record current account deficits in late-2011 due to the ballooning oil import bill (before the government slashed energy subsidies) and weak commodity prices after 2011.
Latest Columns Bank Indonesia
Less than 24 hours after having raised the overnight deposit facility rate (known as Fasbi) by 25 bps to 4.25 percent, Indonesia's central bank (Bank Indonesia) also raised its benchmark interest rate (known as the BI rate) by 25 bps to 6.0 percent. Both these policy responses were conducted in order to support the IDR rupiah, which is one of the worst performing Asian currencies against the US dollar in 2013. Indonesia's central bank expects growing inflationary pressures as the Indonesian government intends to cut fuel subsidies this June.
On the very last trading day of May (31/05), Indonesia's main stock index (IHSG) closed at 5,068.63 points. During the month, the index showed a volatile performance as it reached its peak at 5,251.29 and its low at 4,907.59 points. Overall, the IHSG continued to rise in May despite various negative sentiments. Foreign investors recorded a net sell of IDR 7.9 trillion (USD $806.12 million). However, optimistic domestic investors kept Indonesia's index in the green zone.
Last week, Indonesia's main stock index (IHSG) moved remarkably well. The index managed to set a new record high at 5145.68 points on Friday (17/05/13) as it was pushed up by its strongest pillar of support, the consumer sector. Indonesia's consumer sector rose as much as 8.23 percent last week, while the largest obstacle to growth was the country's mining sector, which experienced a correction of 3.31 percent. What are the underlying reasons of last week's gain towards yet another record high? And is it sustainable?
Indonesia's central bank (Bank Indonesia or BI) announced on Wednesday (15/05/13) that the country's external balance has improved during Q1-2013 as non-oil and gas trade were up. Indonesia's current account deficit stood at USD $5.3 billion (2.4 percent of GDP) in Q1-2013, compared to the previous quarter's deficit of USD $7.6 billion (3.5 percent of GDP). Indonesia has experienced a widening trade deficit, although it recorded a trade surplus of USD $304.90 in March, the first trade surplus since September 2012.
One of the sectors that showed exceptional growth in 2012 was Indonesia's property market. On average, net profit of companies engaged in Indonesia's property sector grew 68 percent during the full year. Of the 45 property companies that are listed on the Indonesia Stock Exchange (IDX), 26 posted net profit growth that exceeded 50 percent. But the success story did not end there. In the first quarter of 2013, the property sectoral index of the IDX continued its fast pace by rising over 41 percent.
After two consecutive days of decline, the Jakarta Composite index (IHSG) had no intention to continue its fall. Indonesia's main index was able to rise 0.43 percent to 4,999.75 points on Monday 29 April 2013. Stocks that had been weakening in recent days were popular among investors. Moreover, both Asian stock indices and foreign net purchases of Indonesian stocks supported Indonesia's index, although it fell short of reaching the psychological boundary of 5,000 points.
Rising American stock indices on Wednesday provided solid support for stock indices around Asia the following day, including Indonesia's main index (IHSG). Amid this global positivity, market players were eager to add stocks to their portfolios. News from Japan, China and the Indonesian central bank's announcement to maintain its low benchmark interest rate were well-received, particularly by domestic market players. It made the IHSG rise to 4,924.26, a 0.96 percent gain.
The central bank of Indonesia (Bank Indonesia, or BI) decided to maintain its record low policy rate for the 15th straight month at 5.75 percent as it is considered consistent with its inflation target range of 3.5-5.5 percent in 2013 and 2014. The central bank also stated that the global economic recovery is accompanied by many uncertainties which result in a lower forecast for Indonesia's economic growth. The full press release of Bank Indonesia can be read below.
Current Finance minister Agus Martowardojo is approved by Indonesia's Parliament (DPR) to replace Darmin Nasution as governor of Indonesia's central bank (Bank Indonesia) in May 2013. Martowardojo, who has been active in banking for over two decades and had a successful term as head of state-controlled Bank Mandiri, was finance minister since May 2010 after taking over from Sri Mulyani, who was pressured out of Indonesian politics.
This week, the World Bank published its Indonesia Economic Quarterly (IEQ, edition March 2013) titled 'Pressures Mounting'. It reports on key developments over the past three months in Indonesia’s economy, and places these in a longer-term and global context. To read the whole report, please visit the World Bank's website at www.worldbank.org or download this edition directly through this link. Below we present the executive summary.
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