By the end of September 2017, Indonesia's foreign exchange reserves stood at USD $129.4 billion, slightly up from USD $128.8 billion in the preceding month, hence hitting a new all-time record. Indonesia's central bank (Bank Indonesia) said this increase was primarily attributed to foreign exchange receipts from tax revenues, government oil & gas export proceeds, the withdrawal of government foreign loans as well as the auction of Bank Indonesia foreign exchange bills.

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Bank Indonesia, the central bank of Indonesia, expects the nation's gross domestic product (GDP) to accelerate modestly in the remainder of the year after having recorded slightly disappointing 5.01 percent year-on-year (y/y) growth in both the first and second quarter of 2017.

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Indonesia's retail sales declined in July 2017 in line with the return to normal consumption patterns after the Ramadan and Idul Fitri celebrations ended. This is reflected in Bank Indonesia's retail sales index that showed a 3.3 percent decline year-on-year (y/y), after a 6.3 percent (y/y) increase in the preceding month. The decline in Indonesia's retail sales occurred in both food and non-food groups.

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Per 31 October 2017 payments on Indonesia's toll roads will be done entirely non-cash, using electronic money. This policy is part of authorities' ambition to create a cashless society and is expected to speed up the payment process at the toll roads, hence easing severe traffic congestion.

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Indonesia's central bank (Bank Indonesia) said the nation's foreign exchange reserves rose to USD $128.8 billion at the end of August 2017, higher than the USD $127.8 billion one month earlier. This growth was primarily attributed to foreign exchange receipts from tax revenues and government oil & gas export proceeds, as well as auctions of Bank Indonesia's foreign exchange bills.

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The central bank of Indonesia (Bank Indonesia) is convinced that geopolitical troubles on the Korean peninsula will not impact negatively on the Indonesian rupiah exchange rate. Bank Indonesia Agus Martowardojo said he sees little impact (yet) but emphasized that the lender of last resort will continue to carefully monitor persistent tensions that have heightened after North Korea's latest nuclear test - its biggest-ever - on Sunday (03/09).

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It was not a total surprise. In fact, signs were on the wall. On Tuesday (22/08) the central bank of Indonesia (Bank Indonesia) decided to cut its benchmark BI 7-day (Reverse) Repo Rate by 25 basis points to 4.50 percent at the August 2017 policy meeting. It was the first time since October 2016 that Bank Indonesia altered its key rate. Meanwhile, the deposit facility and lending facility rates were also cut by 25 basis points, to 3.75 percent and 5.25 percent, respectively.

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Usually Bank Indonesia ends its two-day Board of Governor's meeting on a Thursday. This August, however, the monthly meeting is planned to end today (Tuesday 22 August 2017). This meeting - expected to be completed in the late afternoon or early evening - is closely watched because some believe Indonesia's central bank is prepared to cut its benchmark interest rate.

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Indonesia's central bank (Bank Indonesia) is optimistic that credit growth will accelerate in Indonesia in 2018. The lender of last resort set its credit growth forecast for 2018 at the range of 12-14 percent year-on-year (y/y), up from its 10-12 percent (y/y) growth forecast for 2017, on the back of accelerating economic growth. The Indonesian government proposes economic growth at 5.4 percent (y/y) in 2018 (possibly a too ambitious target).

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Bank Indonesia (the central bank of Indonesia) is convinced that the nation's current account deficit (CAD) will not exceed 2 percent of gross domestic product (GDP) in 2017. In the second quarter of 2017 the CAD widened to 1.96 percent of GDP (or USD $5 billion), from 0.98 percent of GDP in the preceding quarter (or USD $2.4 billion).

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As Indonesia's inflation rate has eased to 6.25 percent (y/y) in October 2015 from 6.83 percent (y/y) in the previous month, and given that Indonesian inflation will ease more markedly in the last two months of 2015 as the impact of the subsidized fuel price hike in November 2014 will vanish, the central bank of Indonesia (Bank Indonesia) seems to have more scope to cut its current relatively high benchmark interest rate, hence giving rise to accelerated economic activity.

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The central bank of Indonesia announced on Thursday (17/09) that it the country’s key interest rate (BI rate) at 7.50 percent, while maintaining the deposit facility rate at 5.50 percent and the lending facility rate at 8.00 percent. According to Bank Indonesia (BI) this decision is consistent with its efforts to push inflation towards the target corridor of 4±1 percent in both 2015 and 2016. In addition, the decision is also part of Bank Indonesia’s measures to anticipate possibilities of a Fed Fund Rate (FFR) hike.

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Although Indonesian stocks managed to rebound, the rupiah continued to depreciate against the US dollar today (25/08). However, rupiah weakening was limited as Bank Indonesia was closely monitoring and intervening in markets to support the rupiah. Based on the Bloomberg Dollar Index, the Indonesian rupiah depreciated 0.03 percent to IDR 14,054 per US dollar. As significant further rupiah weakening is assumed to seriously undermine confidence in the rupiah, the central bank’s intervention efforts are well received by investors.

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During Bank Indonesia’s Board of Governors it was decided on 18th August 2015 to hold the BI Rate at 7.50 percent, while maintaining the Deposit Facility rate at 5.50 percent and the Lending Facility rate at 8.00 percent. The decision is consonant with efforts to control inflation within the target corridor of 4±1 percent in 2015 and 2016. In the short term, Bank Indonesia (BI) is focused on efforts to stabilize the rupiah amid uncertainty in the global economy, by optimizing monetary operations in the rupiah and the foreign exchange market.

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In a bid to boost economic activity in Indonesia, the central bank (Bank Indonesia) revised several regulations involving down payments for the purchase of cars and motorcycles as well as the maximum loan-to-value (LTV) ratios for first or more home purchases by Indonesian citizens. Yati Kurniati, Director of Bank Indonesia’s Macroprudential Department, said that the central bank implemented the looser monetary policy in the property and automotive sectors in an effort to boost credit growth, hence boosting the whole economy.

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Soon it will be made easier to buy property in Indonesia as the country’s central bank (Bank Indonesia) plans to ease down payment (DP) requirements for mortgages. Today (22/05), Bank Indonesia Governor Agus Martowardojo told reporters that the DP obligation for first-home buyers will be lowered from 30 percent to 20 percent of the property’s value. This relaxation should have a positive effect on the performance of Indonesia’s financial institutions and property developers as demand for loans and property is assumed to grow.

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Investors are clearly waiting for results of Bank Indonesia’s Board of Governor’s Meeting, conducted today (19/05). In this monthly policy meeting, Indonesia’s central bank will decide on its monetary approach. For most market participants it is of crucial importance to learn whether Bank Indonesia will adjust its interest rate policy in order to support the country’s economic growth (which slowed to a five-year low in the first quarter of 2015). Ahead of results, scheduled to be released this afternoon, Indonesian stocks and the rupiah weaken.

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Bank Indonesia announced today that the country’s total foreign debt rose 7.6 percent (y/y) to USD $298.1 billion in the first quarter of 2015. This figure means that the pace of the country’s foreign debt growth has slowed from the 10.2 percentage point growth (y/y) that was recorded in the preceding quarter. Both public and private sector foreign debt growth slowed as both sectors are more careful to take up loans amid a weakening rupiah while export revenues decline amid sluggish global (and domestic) economic growth.

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Statistics Indonesia (BPS) announced on Monday morning (04/05) that Indonesia’s inflation accelerated to 6.79 percent year-on-year (y/y) in April 2015. On a month-to-month basis, Indonesian inflation was recorded at 0.36 percent in April. Although this result is in line with analysts’ previous projections, April inflation realization is in sharp contrast with the ‘usual’ inflation pace in the fourth month of the year. Usually, Indonesia records slight deflation in April as prices ease amid the peak of the harvest season.

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Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.

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