Below is a list with tagged columns and company profiles.
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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).
Indonesia's benchmark Jakarta Composite Index touched a new all-time record high on Wednesday (25/10). More importantly, the benchmark index passed beyond the psychological boundary of 6,000 points and closed 1.23 percent higher at 6,025.43 points. This great performance was driven by Indonesia's energy and financial stocks.
Bank Indonesia held its key rate at 4.25 percent at the October 2017 policy meeting. This decision was in line with expectations. In fact, previously, Bank Indonesia officials had already indicated that they would pause their eagerness to ease monetary policy. Since January 2016, the central bank of Indonesia had already cut the benchmark interest rate eight times from 7.25 percent to 4.25 percent in an effort to boost economic growth.
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.
Indonesia's central bank (Bank Indonesia) said the nation's foreign exchange reserves rose to USD $128.8 billion at the end of August 2017, higher than the USD $127.8 billion one month earlier. This growth was primarily attributed to foreign exchange receipts from tax revenues and government oil & gas export proceeds, as well as auctions of Bank Indonesia's foreign exchange bills.
Based on the Bloomberg Dollar Index, the Indonesian rupiah had appreciated 0.65 percent to IDR 13,221 per US dollar by 10:30 am local Jakarta time on Friday morning (08/09), extending Thursday's gains when the rupiah strengthened 0.20 percent against the greenback. What explains this strong rupiah performance?
Latest Columns Rupiah
Statistics Indonesia (BPS), a non-departmental government institute, expects that Indonesia's trade balance will post a deficit of around USD $4 billion in 2014. The key question is whether increased manufacturing and agricultural exports can replace reduced raw mineral exports. The forecast of BPS is approximately similar to the country's trade deficit in 2013. Last year, Southeast Asia's largest economy recorded a deficit of USD $4.06 billion as the total value of exports amounted to USD $182.57 billion, while imports reached USD $186.63 billion.
As companies' financial results of 2013 slowly start to be released, two reports - so far - have raised eyebrows due to significant declines in net profit. These are publicly listed, but majority state-owned, airline Garuda Indonesia and fully state-owned electricity firm Perusahaan Listrik Negara (PLN). Both companies felt the impact of the sharply depreciating Indonesia rupiah exchange rate. The currency fell over 21 percent against the US dollar in 2013 due to capital outflows amid looming US tapering and current account deficit concerns.
Domestic sales of motorcycles in Indonesia fell 11 percent to 580,288 units in January 2014. The main reason for this decline in the first month of the year were severe floods brought about by high rainfall amid a peak of the rainy season. These weather conditions disrupted the distribution of motorcycles from factories to dealers. As a result, all motorcycle brands recorded lower sales figures according to data released by the Indonesian Motorcycle Industry Association (Aisi). However, more factors were at play.
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 January 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the current account deficit, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:
On Wednesday (05/02), Statistics Indonesia (BPS) reported that the economy of Indonesia expanded 5.78 percent in 2013. This result implies that in 2013 Indonesia experienced the slowest pace of GDP growth since its 4.63 percentage growth in 2009. However, this slowing growth was basically self-inflicted as both the Indonesian government and central bank (Bank Indonesia) used various monetary and fiscal policies to curb economic expansion in order to tackle several financial issues.
Despite higher car prices due to the depreciating rupiah exchange rate, domestic car sales in Indonesia rose 11 percent to 107,496 in January 2014 compared to the same month last year. January sales were particularly supported by sales of the low cost green car (LCGC) and low multipurpose vehicle (LMPV). Both these car types enjoy high popularity in Indonesia. In 2013, the Indonesian government provided tax incentives for the establishment of a domestic LCGC industry.
In the last month of 2013, Indonesia's trade balance posted a surplus of USD $1.52 billion, almost twice as high as economists had previously predicted. The December surplus implied Indonesia's third consecutive monthly trade surplus and fifth monthly trade surplus in full year 2013. However, considering the whole year, the trade balance still posted a deficit of USD $4.06 billion in 2013 as the total value of exports amounted to USD $182.57 billion while imports reached USD $186.63 billion.
Despite the release of positive macroeconomic data on Monday (03/02), Indonesia's rupiah exchange rate depreciated 0.22 percent to IDR 12,240 per US dollar based on the Bloomberg Dollar Index. China’s Manufacturing PMI fell to a six-month low of 50.5 in January and put pressure on stocks and currencies in emerging markets. Moreover, the Federal Reserve's further reduction of its quantitative easing program (to USD $65 billion per month) continues to strengthen the US dollar at the expense of emerging currencies.
On Wednesday 5 February 2014, Statistics Indonesia (BPS, a non-departmental government institute) is expected to release Indonesia's official GDP growth figure for the year 2013. It is estimated that the outcome will be the lowest GDP growth figure since 2009 when Southeast Asia's largest economy grew 4.6 percent after feeling the impact of the global financial crisis. In 2013, again, Indonesia felt the negative influence of external troubles. And in combination with domestic factors, Indonesia's economic growth is expected to be around 5.7 percent in 2013.
In the Bloomberg Dollar Index, Indonesia's rupiah exchange rate depreciated 0.47 percent to IDR 12,238 per US dollar on Monday (27/01). The decline of the rupiah was in line with today's trend of weakening Asia Pacific currencies (against the US dollar). Meanwhile, the central bank's mid rate (the Jakarta Interbank Spot Dollar Rate or JISDOR) depreciated 0.17 percent to IDR 12,198 per US dollar. Market participants are concerned about Indonesia's January 2014 inflation and further Federal Reserve tapering.
