The central bank of the United States, the Federal Reserve (FED), announced that it will start winding down its quantitative easing program in January 2014. Currently, the Fed purchases USD $85 billion worth of bonds per month but this amount will be reduced to USD $75 billion next month. The Fed came to this decision as prospects of the US labor market have shown a marked improvement, while economic growth is expected to accelerate to between 2.8 and 3.2 percent in 2014 and between 3.0 to 3.4 percent in 2015.

Read more ›

Various analysts believe that the benchmark stock index of Indonesia (the Jakarta Composite Index or IHSG) can make a good jump in 2014 to the level of between 5,000 to 5,300 points (from 4,182 currently) despite the looming end of the Federal Reserve's quantitative easing program (QE3) which may result in temporary capital outflow from Indonesia's capital markets. The analysts believe that positive internal developments will provide solid support for the IHSG. These developments include the trade balance, rupiah exchange rate and general elections.

Read more ›

The Bank of Japan (BoJ) and Bank Indonesia (BI) signed the third Bilateral Swap Arrangement (BSA) on 12 December 2013. The arrangement is an expansion of the current BSA which almost doubles the size of the facility from USD $12 billion to $22.76 billion. This arrangement also introduces a new feature in the form of a crisis prevention scheme to support potential and/or actual liquidity needs. Both institutions also agreed to establish a cross-border liquidity arrangement to enhance the stability of financial markets.

Read more ›

In Bank Indonesia's Board of Governors' meeting - held on Thursday (12/12) - it was decided to keep the country's benchmark interest rate (BI rate) at 7.50 percent. Executive Director of Bank Indonesia's Communication Department Difi A. Johansyah said that the current rate of 7.50 percent is in line with the institution's inflation target of 4.5 percent (plus or minus one percent). The lending facility and deposite facility (Fasbi) rates are also maintained at 7.5 percent and 5.75 percent respectively.

Read more ›

The central bank of Indonesia (Bank Indonesia) announced that Indonesia’s official reserve assets totaled USD $97.0 billion at the end of November 2013 thus unchanged from the end of the previous month. Bank Indonesia stated that this amount is equivalent to 5.5 months of import or 5.3 months of import and servicing of government external debt. After having grown sharply in recent years, Indonesia's foreign exchange reserves have fallen from USD $112.8 billion at end-2012 as Bank Indonesia tried to support the depreciating rupiah exchange rate.

Read more ›

The latest report of the Organisation for Economic Co-operation and Development (OECD), titled "Structural Policy Challenges in Indonesia", mentions that Indonesia - with an annual GDP growth projection of about 6 percent - is estimated to be the country with the highest level of economic growth among the ASEAN countries between 2014 and 2018. The report is positive about the region's economic future that lies ahead, particularly China, despite the global crisis having managed to slow down economic expansion.

Read more ›

According to the Bloomberg Dollar Index, the Indonesia rupiah exchange rate fell 0.09 percent to IDR 11,976 per US dollar as per 13:46:18 local Jakarta time on Friday (06/12). It is expected that this slight depreciation of the rupiah will continue for the remainder of the trading day. The rupiah received some support from Moody's Investors Service, which stated that the rupiah depreciation itself is not a trigger for a rating downgrade. The ratings agency affirmed the country's Baa3 rating due to Indonesia's strong growth and low debt level.

Read more ›

The Indonesia rupiah exchange rate continued its depreciation on Wednesday (04/12). The central bank's Jakarta Interbank Spot Dollar Rate fell 1.09 percent to IDR 11,960 per US dollar after absorbing the impact of the currency's weak performance on yesterday's spot market. On Tuesday (03/12), local Indonesian companies were buying US dollars at a more attractive exchange rate after the currency had appreciated previously, thus placing serious downward pressure on the currency of Southeast Asia's largest economy.

Read more ›

Although according to Bank Indonesia's Jakarta Interbank Spot Dollar Rate, the Indonesian IDR rupiah exchange rate appreciated 0.97 percent to IDR 11,830 per US dollar on Tuesday (03/12), the currency declined 0.98 percent to IDR 11,885 as of 02.01 ET according to the Bloomberg Dollar Index. The difference between both rates is caused by the fact that Bank Indonesia's rate had not yet absorbed the positive reaction of market participants toward trade and inflation data that were released on Monday (02/12).

Read more ›

The Indonesian rupiah exchange rate extended its losing streak on Thursday (28/11). Bank Indonesia's mid rate plunged 0.99 percent to IDR 11,930 per US dollar, thus moving closer toward the psychological level of 12,000. Various local banks have already set the value of the currency above the 12,000 level on the spot market. It is the weakest level of the rupiah since 2009. Since Monday (25/11), the mid rate has depreciated 1.77 percent. This year so far, the currency has fallen 23.37 percent, thus becoming the worst performing Asian currency.

Read more ›

On 12 October 2013 Finance Minister and Central Bank Governors from Korea and Indonesia agreed to establish a bilateral KRW/IDR swap arrangement in the near future. The size of the swap arrangement is up to KRW 10.7 trillion/IDR 115 trillion (equivalent to USD $10 billion). The effective period of the facility will be three years, and could be extended by agreement by both sides. This Bilateral Currency Swap Arrangement (BCSA) aims to promote bilateral trade and further strengthen financial cooperation, an objective of mutual interest to both countries.

Read more ›

Bank Indonesia’s Board of Governors decided to hold the BI Rate at a level of 7.25 percent, with rates on the Lending Facility and Deposit Facility held respectively at 7.25 percent and 5.50 percent. Bank Indonesia will continue to monitor global and domestic developments and further synergise the monetary and macroprudential policy mix in order to ensure that inflationary pressures remain under control, that rupiah exchange rate stability is maintained according to its fundamentals and the current account deficit is reduced to a sustainable level.

Read more ›

Although part of the market players on Indonesia's Stock Exchange (IDX) engaged in profit taking after Indonesia's benchmark index (IHSG) climbed for two consecutive days, the index still posted growth of 0.71 percent to 4,418.64 points on Thursday (03/10). Factors that contributed to today's gain were the depreciating US dollar as no solution has been found yet concerning the shutdown, generally rising Asian stock indices and the positive message that is conveyed in the APEC meeting in Bali.

Read more ›

Despite some appetite for profit taking, the key stock index of Indonesia (IHSG) was able to rise 0.96 percent to 4,387.60 points on Wednesday (02/10). The index was supported by the appreciating rupiah, a few rising Asian stock indices and foreign net stock purchases. The Indonesian rupiah rose against the US dollar as the latter was impacted upon by the debt ceiling and shutdown issue in the USA. Asian stock indices were mixed. Concerns about the shutdown were offset by rising Asian currencies against the US dollar.

Read more ›

On this week's second day of trading (01/10), the benchmark stock index of Indonesia (IHSG) was able to post a 0.69 percent rise to 4,345.90 points despite ongoing concerns about the economic shutdown in the United States as discussions have not led to agreement about the country's debt ceiling. However, various data from Asia made a good impact. Indonesia's trade surplus in August and deflation in September contributed to positive market sentiments and provided a boost for the rupiah.

Read more ›

Concerns about the US debt ceiling issue have a negative impact on stock indices around the world, including Indonesia's benchmark stock index (IHSG). Market players fear a possible deadlock during the state budget discussions, which - if not resolved - will have a serious negative impact on the economy. Factors that contributed to negative market sentiments were the continued depreciating value of rupiah and weak openings of European stock indices. The IHSG fell 2.43 percent to 4,316.18 on Monday (30/09).

Read more ›

Investors are eagerly waiting for the release of Indonesia's September inflation rate. Indonesia has been hit by high inflation since the government decided to increase prices of subsidized fuels at the end of June. High inflation limits its people's purchasing power and as domestic consumption accounts for about 55 percent of Indonesia's economic growth, it thus impacts negatively on GDP growth, particularly after Bank Indonesia raised its benchmark interest rate (BI rate) from 5.75 to 7.25 percent between June and September.

Read more ›

Indonesia's benchmark stock index (IHSG) was up 0.40 percent to 4,423.72 on Friday (27/09). The gain was mainly carried by demand for a number of Indonesian blue chip stocks. Astra International rose 1.16 percent after Deutsche Securities Indonesia, Credit Suisse Securities Indonesia and Citigroup Securities Indonesia increased their stakes in one of Indonesia's largest diversified conglomerates. Other blue chips that performed well were Perusahaan Gas Negara, Bank Mandiri, Telekomunikasi Indonesia and Indofood Sukses Makmur.

Read more ›

As had been hoped, after closing the gap at 4.375-4.403, Indonesia's benchmark stock index (IHSG) did not continue its fall at the same pace as it had in the past couple of days. Investors were still cautious, however, and took a wait and see attitude. Foreign investors were net sellers of Indonesian stocks, while the rupiah exchange rate kept depreciating. Moreover, Asian stock indices were mixed and thus provided no good support for the IHSG. The index fell 0.02 percent to 4,405.89. Domestic investors were net buyers of Indonesian stocks.

Read more ›

Both the Indonesian currency and the benchmark stock index (IHSG) continued their fall on Tuesday (24/09). Wall Street's weak performance on the last three trading days was a major factor that brought negative market sentiments to the Indonesia Stock Exchange (IDX). Even good openings in Europe were not able to push the IHSG back into green territory. The index fell 2.25 percent to 4,460.41 points. Foreign investors were net sellers of Indonesian stocks, while domestic investors were net buyers.

Read more ›