The Indonesian rupiah is flirting with the IDR 13,000 per US dollar level on Monday (07/03) supported by improving risk appetite of investors. By 13:40 pm local Jakarta time, the currency of Indonesia had appreciated 0.64 percent to IDR 13,047 per US dollar (Bloomberg Dollar Index). The rupiah is now on a 13-day 'winning streak', its longest rally in six years, and is the second-best performing emerging market currency after Brazil's real so far this year. What is behind this good performance, and is it sustainable?

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On 6 March 2016, 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 over the last seven days. Most of the topics involve economic matters such as the performance of the rupiah, February inflation & manufacturing activity, financial sustainability of Indonesia's health insurance program, Sukri bonds, public accountability, natural resources, and more.

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Indonesia's consumer confidence regarding the country's macroeconomic conditions weakened in February 2016. Bank Indonesia's Consumer Confidence Index dropped 2.6 points to 110. The survey indicates that there are two reasons that explain this decline. Firstly, lower optimism about current economic conditions of Indonesia and, secondly, lower optimism regarding job availability over the next six months. Bank Indonesia's monthly survey is based on data provided by 4,600 households in 18 Indonesian cities across the archipelago.

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In line with expectation, Indonesia's consumer price index fell in February 2016. Based on the latest data from Statistics Indonesia (BPS), released this morning, Southeast Asia's largest economy recorded deflation of 0.09 percent month-on-month (m/m) in the second month of the year on the back of lower food prices and lower electricity tariffs. However, on a year-on-year basis, Indonesia's inflation rate rose from 4.14 percent (y/y) in January to 4.42 percent (y/y) in February.

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Indonesian Agriculture Minister Andi Amran Sulaiman has a strong suspicion that the "rice mafia" is behind the recent fluctuations in rice supply and prices in Indonesia. Suspicion emerged after new rice supplies suddenly 'flooded' Indonesian markets in February when prices of rice had already risen due to the scarcity of supplies. Sulaiman believes there is a cartel consisting of six big Indonesian rice distributors that deliberately hid rice output after last year's harvest and waited for prices to rise significantly before supplying rice to the markets in order to see higher profits.

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The Indonesian government will revise a number of macroeconomic assumptions set in the 2016 State Budget (APBN 2016). This budget was approved on 30 October 2015 and therefore has begun to fall out of tune with the current economic reality. Indonesian Finance Minister Bambang Brodjonegoro said the indicators that need some rethinking are the Indonesian crude oil price, inflation, and the rupiah exchange rate.

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Today, Bank Indonesia will start its February two-day policy meeting. Markets are eagerly awaiting whether the central bank of Indonesia will indeed cut its key interest rate (BI rate) again. Last month, it had cut the BI rate by 0.25 percent to 7.25 percent as inflation, the current account deficit and the rupiah rate were all under control. Although the rate cut was welcomed by the business community it was considered not enough to push borrowing costs lower in Southeast Asia's largest economy hence unable to boost economic activity significantly.

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On 7 February 2016, 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 over the last seven days. Most of the topics involve economic matters such as an analysis of 2015 GDP growth realization, tax revenue, inflation, manufacturing activity, foreign relations, business restructuring of Panasonic and Toshiba, consumer confidence, the IKEA court case, the Zika virus, and more.

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The central bank of Indonesia (Bank Indonesia) reported that Indonesian consumers are becoming increasingly optimistic about economic prospects and their personal financial situation this year, evidenced by a 5.1 point rise in Bank Indonesia's Consumer Confidence Index to 112.6 points in January 2016. This index is based on a survey, involving 4,600 households in 18 cities across the archipelago (a reading above 100 indicates optimism, while a reading below 100 indicates pessimism).

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Indonesia's inflation rate rose 0.51 percent on a monthly basis in January 2016 according to the latest data from Statistics Indonesia (BPS). Suryamin, Head of BPS, said food products accounted for most of the inflationary pressures in the first month of the year. Inflation tends to have a peak in the months December and January due to Christmas and New Year celebrations when consumer demand for various products, including food items, increases (the other peak comes in the June-August period due to Islamic celebrations).

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After continuously reaching new record-high levels last week, the Indonesia Stock Exchange (IHSG) finally had to give up some of its gain and closed 1.04 percent lower. Declining Asian stock markets (excluding Japan's main index) and fears that the IHSG had already reached a (too) high level impacted on today's result. Market participants, who recently confirmed good corporate annual results of many companies by buying, now engaged in profit taking.

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Apparently, yesterday's decline was only a small stumbling block for the Indonesia Stock Exchange (IHSG). Indonesia's main indicator rebounded strongly after feeling the effects of stronger American stock indices that were positively influenced by a rise in Housing Index and Consumer Confidence. Moreover, the IHSG accelerated its gain after Asian stock markets and the opening of Europe's stock indices were positive.

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