Indonesia's exports of plastics and plastic products fell 18.5 percent year-on-year (y/y) in 2015 to USD $2.25 billion from USD $2.76 billion in the preceding year. This decline was caused by weak global demand for plastic, falling selling prices and the low competitiveness of Indonesia's plastics and plastic products. Also in terms of volume Indonesia's plastic exports declined. Based on the latest data from Indonesia's Trade Ministry, the nation's plastics export volume fell 5.58 percent (y/y) to 1.39 million tons last year.

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Although global media focus on the vicious terrorist attacks that occurred today in Jakarta, the country's central bank (Bank Indonesia) made a surprise move by cutting its key interest rate (BI rate) by 25 basis points to 7.50 percent at the January policy meeting. It is a surprise as Bank Indonesia emphasized repeatedly that it is primarily focused on rupiah stability while - amid severe market volatility (due to economic turmoil in China) - the rupiah remains under pressure.

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Asian stocks are again in deep red territory on Thursday (14/01), led by Chinese shares (which are on track to enter a bear market) as well as Japanese shares. It means that the rebound that had occurred earlier this week - caused by positive export data from China - was short-lived. The continued slide of oil prices (below USD $30 per barrel) and turmoil in China cause money to flow away from equity and fragile emerging market currencies.

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On Wednesday (13/01) Indonesia's central bank is set to start its monthly policy meeting. A novelty this year is that the monthly policy meetings of Bank Indonesia will take two days instead of one. Another interesting novelty is that Bank Indonesia invited Indonesia's Chief Economics Minister Darmin Nasution to attend the central bank's first policy meeting of 2016. Analyst opinions about whether Bank Indonesia has room to cut its relatively tight monetary policy are mixed.

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The sell-off continued in Asia on Monday (11/01). Asia's stock indices - led by China's Shanghai Composite Index - fell deep into red territory. China's muted inflation in December, today's 5.33 percent plunge of the Shanghai Composite Index, sliding oil prices, and falling stocks on Wall Street last week (US stocks experienced their worst week in four years), made investors in search of safe haven assets such as gold, Japan's yen and the US dollar. Meanwhile, Indonesia's benchmark Jakarta Composite Index fell 1.78 percent to 4,465.48 points.

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The central bank of Indonesia (Bank Indonesia) announced that the country's foreign exchange reserves have risen considerably in December 2015. At the end of the last month of 2015 the foreign exchange assets stood at USD $105.9 billion, up from USD $100.2 billion in the preceding month. This is a remarkable result as the global and domestic economy is still plagued by uncertainty and volatile capital flows (in December the Federal Reserve finally raised its key Fed Fund Rate by 25 basis points).

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Stocks and currencies across Asia are under heavy pressure on Thursday (07/01) after China's central bank set its yuan rate 0.51 percent lower (at 6,5646 per US dollar). As a result, Chinese shares plunged over 7 percent (triggering the new circuit-breaking mechanism - for the second day this week - 30 minutes after trading opened today). Asian shares are also weak due to big losses in Europe and on Wall Street overnight. Markets reacted to the oil price that slid to a more-than-seven-year low at USD $33.97 per barrel.

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Although most stock markets in Asia were still in red territory, extending Monday's plunge, Indonesian stocks and the rupiah managed to rebound on Tuesday (05/01). Indonesia's benchmark Jakarta Composite Index rose 0.70 percent to 4,557.82 points. Meanwhile, the Indonesian rupiah appreciated 0.37 percent to IDR 13,892 per US dollar (Bloomberg Dollar Index). What happened on today's trading day and what explains the deviation between Indonesian assets and the general Asian trend?

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Contrary to expectations, Indonesian stocks and the rupiah had a weak start of the new year. On Monday (04/01) Indonesia's benchmark Jakarta Composite Index fell 1.46 percent to 4,525.92 points, while the Indonesian rupiah depreciated 0.82 percent to IDR 13,943 per US dollar (Bloomberg Dollar Index). The performance of Indonesian stocks is in line with the performance of stocks around the globe. In China stock trading was even halted twice due to its plunging index. What happened today?

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The Finance Ministry of Indonesia released a statement on Sunday (03/01) saying that Indonesia failed to meet the majority of economic targets that were set in the (revised) 2015 State Budget. Primary reasons for the weaker-than-targeted performance are low commodity prices, sluggish global economic growth, China's economic slowdown, and capital outflows triggered by the tighter monetary policy of the US Federal Reserve. Only realization of inflation and the treasury yield were in line with the government's targets.

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On Thursday (22/08), Indonesia's main stock index (IHSG) was not able to continue the rebound that occurred yesterday when the country's biggest pension fund, Jamsostek, began buying blue-chip stocks in a move to support the ailing index. Indonesia's benchmark index has now lost about 20 percent since its record peak in May 2013. Today, it fell 1.11 percent to 4,171.41 points. Eight sectoral indices weakened, of which the top losers were construction (-5.78 percent), basic industry (-3.42 percent), and finance (-2.39 percent).

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Concerns about Indonesia's weakening rupiah intensified on Wednesday (21/08) as the currency is now balancing on the psychological boundary of IDR 11,000 per US dollar. The rupiah continued its downward spiral today although its decline was limited due to the intervention of Indonesia's central bank (Bank Indonesia) that started selling US dollars again in an effort to support the rupiah. According to data compiled by Reuters, the rupiah has now fallen 10.7 percent this year.

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On Tuesday (20/08), Indonesia's benchmark stock index (IHSG) continued its decline with its fourth consecutive day of losses. Amid major concerns about Indonesia's economic growth, high inflation, tighter monetary policy and current account deficit, the IHSG fell 3.21 percent to 4,174.98 points. It means that the index now stands about 21 percent lower than its record peak in May 2013. Foreign investors have been pulling money out of the Indonesian market. According to Bloomberg, about USD $255 million has been retracted in the last two days.

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The government of Indonesia proposes to allocate IDR 336.24 trillion (USD $32.6 billion) for subsidy spending in the 2014 state budget draft: IDR 284.7 trillion (USD $27.6 billion) for energy subsidies and IDR 51.6 trillion (USD $5.0 billion) for non-energy subsidies. The proposed amount implies a 3.41 percent fall in total subsidy allocation compared to Indonesia's state budget in 2013. However, despite a reduction, subsidy expenditure is still large at 18.5 percent of total government spending (IDR 1,816.7 trillion).

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Analysts expect that Indonesia's benchmark stock index (IHSG) will end mixed today (20/08) after yesterday's large plunge amid heavy market concerns. Yesterday, the index dropped 5.58 percent to 4,313.52 points, the lowest since October 2011. Indonesia posted a current account deficit in the second quarter of 2013, while Thailand entered into a recession. The MSCI Emerging Market index¹, which includes both countries, fell 1.4 percent to a six-week low. Below a short overview of factors that caused negative sentiments on Indonesia's market.

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After two days of growth, Indonesia's main stock index (IHSG) became victim of profit taking on Thursday (15/08). Particularly domestic investors were eager to sell their Indonesian assets. Falling indices on Wall Street on Wednesday (14/08) in combination with global uncertainty about the end of the Federal Reserve's quantitative easing program made a negative impact on Asian stock indices, including the IHSG. Indonesia's central bank's decision to keep its benchmark interest rate at 6.50% was well-received by most investors.

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The foreign exchange reserves of Indonesia keep on falling from its historical peak of USD $124.64 billion in August 2011 to USD $92.67 billion at the end of July 2013. This development seems to highlight long-standing weaknesses in Indonesia's sovereign's external finances, as credit agency Fitch Ratings detected on several occasions before. The republic of Indonesia is currently characterized by four deficits, to wit a current account deficit, a balance of payments deficit, a trade balance deficit and a fiscal deficit.

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After Wall Street turned back into the green zone on Tuesday (13/08) and was accompanied by continued rising stock indices in Europe, it provided good support for Asian stock indices on Wednesday (14/08), including Indonesia's main stock index (IHSG). Indonesian mining commodities and plantation stocks fell but these losses were offset by rising big cap stocks (particularly finance stocks) and speculation that Indonesia's central bank will keep its benchmark interest rate (BI rate) at 6.50 percent.

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Worldwide, most stock indices fell on Wednesday (07/08), particularly Japan's Nikkei index, after it has been speculated that the Federal Reserve may phase out the third round of its quantitative easing program in September 2013. This program, involving a monthly USD $85 billion bond-buying package, aims to spur US economic growth while keeping interest rates low. However, one important side effect has been rising stock markets around the globe. Now the end of QE3 is in sight, investors shy away from riskier assets.

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Indonesia’s inflation rate in July 2013 was significantly higher than analysts had previously estimated. The country’s July inflation figure accelerated to 3.29 percent. On year-on-year basis, it now stands at 8.61 percent, the highest inflation rate since many years. Particularly food commodity and transportation prices rose steeply. The main reason for Indonesia's high inflation is the reduction in fuel subsidies. In late June, the government increased the prices of subsidized fuels in order to relieve the ballooning budget deficit.

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