Indonesia’s rupiah exchange rate continued to depreciate on Wednesday (07/01). Based on the Bloomberg Dollar Index, the currency had depreciated 0.66 percent to IDR 12,731 per US dollar by 15:50 pm local Jakarta time amid prolonged weak global sentiments. Falling oil prices signal sluggish global economic growth - with the exception of the US economy which is showing structural recovery and thus fuels expectation of higher US interest rates - and speculation that Greece may exit the Eurozone.

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On 28 December 2014, 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 in the last seven days. Most of the topics involve economic matters such as rupiah exchange rate performance, a geothermal energy update, forecasts for Indonesia’s November trade balance and December inflation, as well as the breaking news story about the missing AirAsia airplane.

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The trade balance of Indonesia is expected to show another deficit in November 2014 as oil and gas imports in combination with weak commodity exports continue to plague the balance. However, Executive Director at the Economic and Monetary Policy Department of Indonesia’s central bank (Bank Indonesia) Juda Agung said that the deficit will most likely turn into a surplus soon. Still, another monthly trade deficit implies that the country’s wide current account deficit has few chances to improve markedly at the year-end.

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On Monday (03/11), several important macroeconomic data were released by statistics Indonesia. Firstly, inflation was relatively high in October at 0.47 percent month-on-month (m/m). Secondly, Indonesia posted another trade deficit in September (USD $270 million). Thirdly, Indonesia's October manufacturing activity showed a contraction (the country’s manufacturing Purchasing Manages' Index fell to a 14-month low of 49.2 in October). Lastly, a total of 791,300 foreign tourists visited Indonesia in September.

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On 5 October 2014, 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 in the last seven days. Most of the topics involve economic topics such September inflation, August trade balance, the IPO of Blue Bird, a rupiah and stock update, a new plantations bill, political developments, and more.

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Statistics Indonesia (BPS) released various economic data today (01/10) - including inflation, the trade balance and manufacturing activity - that give a good indication about the state of the Indonesian economy. Although not all data was positive, market participants were content, evidenced by an appreciating rupiah exchange rate and rising Indonesian stocks. Based on the Bloomberg Dollar Index, the rupiah appreciated 0.43 percent to IDR 12,135 per US dollar, while the Jakarta Composite Index climbed 0.06 percent on Tuesday (01/10).

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As expected, the pace of inflation in Indonesia eased in August 2014. On Monday (01/09), Statistics Indonesia announced that August inflation reached 0.47 percent, implying that on a year-on-year basis inflation eased to 3.99 percent from 4.53 percent in the previous month. Meanwhile, Indonesia posted a USD $124 million trade surplus in July 2014 mainly due to declining imports of machinery and mechanical instruments. The country’s manufacturing activity, however, contracted in August for the first time in a year.

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The trade balance of Indonesia swung back into a deficit in June 2014. According to data from Statistics Indonesia (BPS), published on Monday (04/08), the country’s trade deficit amounted to USD $300 million in June. Indonesian exports grew 4.45 percent (year on year) to USD $15.42 billion, while Indonesian imports increased 1.83 percent (year on year) to USD $15.72 billion. This year so far (the January to June period), Southeast Asia’s largest economy has to cope with a USD $1.15 billion trade deficit.

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The central bank of Indonesia (Bank Indonesia) decided to keep its benchmark interest rate (BI rate) at 7.50 percent at today’s Board of Governor’s meeting. The lending facility as well as deposit facility were maintained at 7.50 and 5.75 percent, respectively. The central bank believes that the current interest rate environment is able to push the inflation figure back to its target range of between 3.5 and 5.5 percent by the year-end. Earlier this month, Statistics Indonesia announced that inflation has eased to 6.70 percent (year-on-year) in June 2014.

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After a worrying trade deficit of USD $1.96 billion in April 2014, the trade balance of Indonesia swung back into a surplus in May 2014. On Tuesday (01/07), Indonesia’s Central Statistics Agency (BPS) announced that the May trade surplus was USD $69.9 million. The country’s exports rose 3.73 percent (month-on-month) to USD $14.83 billion, while imports fell 9.23 percent (month-on-month) to USD $14.76 billion in May. However, in the first five months of 2014 Indonesia still recorded a trade deficit of USD $0.82 billion.

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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 June 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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Inflation in June 2014 increased by 0.43 percent (month-to-month, mtm) in accordance with the traditional pattern ahead of the holy fasting month of Ramadan and Idul Fitri celebrations. These occasions always trigger inflationary pressures as consumers increase spending. However, June inflation remains under control and is even lower than the historical average in June in recent years (0.56 percent mtm). On a year-on-year (yoy) basis, inflation stood at 6.70 percent, thus continuing the downward trend since the beginning of 2014.

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The Indonesian rupiah exchange rate is appreciating sharply on Monday (30/06). By 15:13pm local Jakarta time, the currency of Indonesia had strengthened 1.31 percent to IDR 11,838 against the US dollar. Main factors that cause this performance are the weakening US dollar (as a slowdown in the US economic recovery evokes expectations that the Fed Rate will not be raised soon) and falling oil prices; the US benchmark West Texas Intermediate declined 30 cents to USD $105.44 in mid-morning trade while Brent crude fell 22 cents to USD $113.08.

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The Indonesian rupiah exchange rate depreciated 0.07 percent to IDR 12,099 per US dollar on Thursday (26/06) based on the Bloomberg Dollar Index, thus extending its recent weakening trend. This trend is expected to continue further as Bank Indonesia said it would allow rupiah depreciation in order to make the country’s exports more competitive (in an attempt to curb the current account deficit). However, this also dampens demand for Indonesian bonds. The 10-year yield rose to the highest level since February 2014.

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The Indonesian rupiah exchange rate depreciated considerably on Wednesday (25/06) after Indonesia’s central bank (Bank Indonesia) said it would allow rupiah depreciation in an attempt to boost competitiveness of the country’s exports, while curbing imports. This strategy will have a positive impact on the country’s troubled trade balance. Based on the Bloomberg Dollar Index, the currency had weakened 0.67 percent to IDR 12,070 per US dollar by 14:30pm local Jakarta time.

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The Indonesia rupiah exchange rate depreciated 0.16 percent to IDR 11,992 per US dollar on Monday (23/06) according to the Bloomberg Dollar Index, thus extending the currency’s recent depreciating trend. Meanwhile, Bank Indonesia's benchmark rupiah rate (known as the Jakarta Interbank Spot Dollar Rate, or, abbreviated JISDOR) depreciated 0.03 percent to IDR 11,971 against the greenback. What were the factors that influenced the rupiah’s performance today?

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) declined 0.34 percent to 4,847.70 points on Friday (20/06). Trade was thin on this week’s last trading day with only about 3.4 billion shares - valued at IDR 3.8 trillion (USD $319 million) - being traded on the Indonesia Stock Exchange (well below the average daily value of IDR 6.1 trillion). Foreign investors accounted for 48 percent of total trading, recording net buying worth of IDR 31.3 billion (USD $2.6 million).

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After the Indonesian rupiah exchange rate temporarily surpassed the psychological boundary of IDR 12,000 per US dollar on Wednesday (18/06), concerns about the fundamentals of the currency emerged. The currency has been under pressure recently due to external factors (monetary policy of the Federal Reserve and geopolitical tensions in Iraq) and domestic factors (large private debt, significant US dollar demand, the wide trade deficit and political uncertainty ahead of the presidential election).

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The Indonesian rupiah exchange rate depreciated 0.62 percent to IDR 11,893 per US dollar on Tuesday (17/06), a four-month low. The main reason behind this poor performance is increased concern about the impact of violence in northern Iraq - namely higher global oil prices - on Indonesia’s trade and budget deficits as Indonesia subsidises a significant amount of domestic fuels). As oil and gas imports accounted for about 23 percent of total imports of Indonesia in April 2014.

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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 May 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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