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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Indonesia's state bonds are expected to remain a popular investment instrument in the second quarter of 2016 - perhaps even the most popular instrument - due to stable and more attractive yields compared to other investment instruments. Although the Indonesian rupiah and the benchmark stock index (Jakarta Composite Index) have both strengthened markedly over the past week (particularly supported by higher crude oil prices), the global economy remains plagued by uncertainties (China's economic slowdown and possible higher borrowing costs in the USA). Analysts say that in this context investor appetite for Indonesian bonds increases.

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The Indonesian rupiah has become the center of attention being the strongest emerging market currency (tracked by Bloomberg) so far this year. Indonesia's currency has appreciated 4.97 percent (spot market) against the US dollar since the start of 2016, outperforming the Brazilian real and Malaysian ringgit. Meanwhile, Indonesian government and central bank officials say they are committed to encourage further strengthening of the rupiah. On Friday (04/03), Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.76 percent to IDR 13,159 per US dollar.

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The Indonesian rupiah continues to appreciate sharply. By 13:15 pm local Jakarta time on Friday (04/03), Indonesia's currency had appreciated 0.96 percent to IDR 13,105 per US dollar (Bloomberg Dollar Index), its strongest level since May 2015. Meanwhile, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.76 percent to IDR 13,159 per US dollar. What explains this strong performance of the rupiah?

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In line with the overall trend in Asia, the Indonesian rupiah continued to appreciate against the US dollar on Wednesday (02/03). Based on the Bloomberg Dollar Index the rupiah strengthened 0.34 percent to IDR 13,301 per US dollar, touching a four and a halve-month high and recording its longest winning streak since 2010. Over the past ten trading days the rupiah has been appreciating against the greenback. What made the Indonesian rupiah strengthen today?

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Most Asian stock markets fell on Tuesday (23/02) on extended concerns about the world's low crude oil prices and China's economic slowdown. Indonesia's benchmark Jakarta Composite Index (IHSG) plunged 1.16 percent to 4,654.05 points, leading declines in Asia as the nation's banking shares were also affected by local financial authorities' plans to curtail the net interest margin in order to bring down Indonesian banks' lending rates and boost credit expansion in Southeast Asia's largest economy.

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Indonesia's benchmark Jakarta Composite Index (IHSG) rose 0.24 percent to 4,708.62 points, while the Indonesian rupiah appreciated 0.52 percent to IDR 13,439 per US dollar (Bloomberg Dollar Index) on Monday (22/02) amid mostly rising emerging market stocks and appreciating emerging market currencies. Investor appetite for riskier assets was triggered by higher global oil prices and rallying Chinese shares (brought about by optimism after the appointment of a new chairman of the China Securities Regulatory Commission.

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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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This morning various economic data were released in Asia, most importantly data from China and Japan. China posted a record USD $63.3 billion trade surplus in January 2016, while Japan saw its gross domestic product (GDP) contract more-than-expected at 1.4 percent (y/y) in the fourth quarter of 2015. However, despite weak GDP growth data Japanese stocks managed to surge, while Chinese stocks tumbled after the record monthly trade surplus. How is that possible? And what about Indonesian assets today?

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While global stocks have been moving in and out bearish territory amid severe volatility caused by China's economic slowdown and low oil prices, Indonesia's benchmark Jakarta Composite Index is one of the few stock indices that has risen so far in 2016 (2.64 percent since the start of the year). Foreign and domestic investors seem to regained confidence in Indonesian assets due to Indonesia's better-than-expected GDP growth in Q4-2015 and the knowledge that the Jakarta Composite Index already experienced a sharp correction last year, falling below its fundamental value.

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Stock markets in Asia are mixed, yet tepid on Friday (16/12) after the US Federal Reserve raised its interest rate regime for the second time in a decade on Wednesday (14/12). Although the Fed's move was widely anticipated (and therefore already "priced in" to a high degree) it still resulted in some capital outflows from Asia's stock markets on Thursday (13/12). Japan, as usual, is the notable exception as US dollar strength (or yen weakness) makes Japan's export-oriented stocks more attractive.

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Indonesian President Joko Widodo said market participants should reduce their focus on the US dollar as benchmark for Indonesia's rupiah currency. Instead of the US dollar, it is better to use China's renminbi, the European Union's euro, or Japan's yen as a benchmark for the rupiah as these rates better reflect the fundamentals of Southeast Asia's largest economy. The rupiah has come under pressure against the US dollar after Donald Trump's victory in the 2016 US presidential election.

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The Bank of Indonesia recently resorted to a sudden cut in interest rate (by 25 bps to 4.75 percent) at its 20th October 2016 meeting. This followed a 25 bps reduction in September and thus this is the sixth time this year that the Indonesian central bank has elected to loosen monetary policy.

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Indonesia's benchmark Jakarta Composite Index experienced another tough day on Monday (14/11). After Indonesian stocks plunged 4.01 percent on Friday, stocks fell another 2.2 percent today. Not only Indonesia, but most Asian markets are hit by the selloff, particularly the emerging markets of Southeast Asia. Investors are re-evaluating their emerging market assets now Donald Trump has been elected the next US president (and who can rely on a Republican-controlled US Congress). To make matters worse, current uncertainty is expected to persist in the next couple of months.

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Bank Indonesia (BI) is the central bank of the Republic of Indonesia, and was known as "De Javasche bank" or "The Java Bank" in the colonial period.  Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank. As an independent state institution, Bank Indonesia is fully autonomous in formulating and implementing each of its assumed tasks and most policy goals tend to center around the ability to stabilize prices in the economy.

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Asian stocks, including Indonesia's benchmark Jakarta Composite Index, continue their persistent slide on Friday (04/11) ahead of the US presidential election on Tuesday 8 November 2016. By 10:45 am local Jakarta time, Indonesian stocks were down 0.29 percent to 5,314.00 points, while the rupiah had depreciated 0.14 percent to IDR 13,093 per US dollar (Bloomberg Dollar Index). Besides the too-close-to-call US election, investors are also keeping an eye on the mass demonstration in Jakarta today.

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The central bank of Indonesia (Bank Indonesia) has become slightly less optimistic about Indonesia's economic growth in the third quarter of 2016. Bank Indonesia revised down its growth projection to below the 5 percent (y/y) mark for Q3-2016 (from an earlier forecast of 5.2 percent). However, the lender of last resort still expects to see a better performance compared to the 4.73 percent (y/y) pace posted in Q3-2015. Meanwhile, low inflation and a strong rupiah could result in another interest rate cut in Southeast Asia's largest economy.

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Packaged food producer Indofood CBP Sukses Makmur, subsidiary of Indofood Sukses Makmur, is expected to see rising profit in the second half of 2016 on the back of lower prices of raw materials (particularly wheat flour, the key ingredient for instant noodles), the stronger rupiah and improved purchasing power of Indonesia's consumer force. Meanwhile, the company may manage to curb losses that originate from the beverage segment. Indofood CBP Sukses Makmur has 6 business segments: noodles, dairy, snack foods, food seasoning, nutrition and special food products, and beverages.

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The central bank of Indonesia (Bank Indonesia) has made some important decisions under the current Governor Agus Martowardojo. Here, Bank Indonesia has been directed toward achieving the responsibility of making financial decisions that promote consumer price stability over the long-term. This has resulted in widespread gains in the rupiah against a basket of world currencies -- including the US dollar. But recent rate cuts now have the potential to reverse these broader trends.

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Many things happened this week. A devastating terror attack in Nice (France) killed at least 84 people, while - at the time of writing - a coup attempt occurred in Turkey (that seems to have failed). However, these events have little impact on the performance of global stocks and currencies (with the obvious exception of the Turkish lira). Wall Street touched record highs, while Indonesian stocks rose to a 13-month high and the Indonesian rupiah strengthened to a four-month high. Lets take a closer look at the performance of these markets over the past week.

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