Although causing waves of both criticism and support, Indonesia's central bank implemented BI Regulation No. 17/3/PBI/2015 regarding the Mandatory Use of the Rupiah in Indonesia on 1 July 2015 thus restricting the use of foreign currencies in transactions conducted within Indonesia in an effort to deepen the domestic rupiah market and stabilize the rupiah. After nearly seven months in effect the new regulation seems to have worked and lessened domestic demand for the US dollar according to a Bank Indonesia official.

Read more ›

Indonesia's inflation is expected to accelerate in January 2016 according to the country's central bank (Bank Indonesia). Bank Indonesia detected a spike in prices of several food commodities - such as shallots, chili, and beef - at the start of the year. Bank Indonesia Governor Agus Martowardojo told reporters that he expects the country's inflation rate to rise by around 0.75 percent month-on-month (m/m) in January. This would imply that inflation will accelerate to 4.38 percent on an annual basis (from 3.35 percent y/y in December 2015).

Read more ›

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.

Read more ›

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.

Read more ›

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).

Read more ›

Good news at the start of the new year. Indonesia's consumer confidence has risen in December 2015 according to the latest Bank Indonesia survey. Consumer optimism means that consumers are more likely to purchase goods hence giving ammunition for accelerated economic growth (domestic consumption accounts for about 55 percent of the nation's total economic growth). The portion of income that respondents use for consumption rose 0.6 percent month-on-month (m/m) to 69 percent of their income.

Read more ›

The Indonesian rupiah continued its remarkable rally on Tuesday (22/12). The currency had appreciated 0.98 percent to IDR 13,672 per US dollar by 11:10 am local Jakarta time (Bloomberg Dollar Index). The rupiah has recovered from a recent low of IDR 14,123 on Monday 14 December to IDR 13,672 per US dollar, a 3.2 percentage point advance in about one week. There are several matters that explain this remarkable performance.

Read more ›

Bank Indonesia, the central bank of Indonesia, expects banks' credit growth realization to reach 9-10 percent (y/y) in 2015, below its target of 11-13 percent (y/y). Up to October 2015 Indonesian banks' credit growth stood at 10.4 percent, slowing from 11.1 percent in the preceding month. Juda Agung, Executive Director of Economic and Monetary Policy Department Bank Indonesia, said slowing credit growth is in line with the economic slowdown.

Read more ›

Bank Indonesia, the central bank of Southeast Asia's largest economy, kept its key interest rate (BI rate) at 7.50 percent at the December policy meeting on Thursday (17/12). Meanwhile, the overnight deposit rate facility (Fasbi) was left unchanged at 5.50 percent and the lending facility at 8.00 percent. It was the tenth consecutive month without changing the country's interest rate environment (in February 2015 the central bank cut the BI rate by 0.25 percent).

Read more ›

The foreign exchange reserves of Indonesia fell slightly in November. According to the latest data from Indonesia's central bank (Bank Indonesia) the reserves stood at USD $100.24 billion at end-November, down from USD $100.7 billion at the end of the preceding month. The reserves fell on foreign exchange receipts, public foreign debt payments and the central bank's efforts to stabilize the rupiah exchange rate.

Read more ›

In essence, the Indonesian rupiah showed the same performance in 2024 as it did in the previous four years, namely it continued to weaken against the US dollar, albeit (the outlook for) interest cuts in the United States did cause a sharp, yet temporary, rebound in August 2024. Shortly after that rebound, the rupiah came under heavy pressures again, which continued into the last month of 2024.

Read more ›

For Indonesia’s currency and stock markets, November 2024 was not a good month. We saw some rupiah depreciation reappearing (against the US dollar) and a falling benchmark stock index (Jakarta Composite Index, or IHSG). What this means is that market participants are nervous. And in times of nervousness, Indonesian assets are typically the first victim as participants seek safe haven assets. 

Read more ›

As expected, Bank Indonesia cut the benchmark interest rate at its monetary policy meeting on 17-18 September 2024. The BI rate was cut by 25 basis points (bps) to 6.00 percent, while also lowering the deposit facility and lending facility rates by 25 bps to 5.25 percent and 6.75 percent, respectively.

Read more ›

When global markets became really confident that the US Federal Reserve would cut its benchmark interest rate in September 2024, there occurred a sort of relief rally that is visible in Chart A below. Amid the increase in risk appetite, Indonesian stocks and the rupiah rate strengthened. Chart A shows that this rally started in late-July or early August 2024.

Read more ›

Over the past month, expectations of a looming interest rate cut in the United States (US) have only grown. The US Federal Reserve is widely expected to start cutting its benchmark interest rate at its policy meeting scheduled for 17-18 September 2024. In fact, the question seems to be whether it’ll be a 0.25 or 0.50 percentage point cut.

Read more ›

It is very interesting to take a quick look at the conclusions drawn at the latest US Federal Reserve meeting (held on 30-31 July 2024), as these conclusions have a big impact on global financial markets, including the Indonesian rupiah rate (and even on monetary policy of Indonesia’s central bank, Bank Indonesia).

Read more ›

In line with our projection, the central bank of Indonesia (Bank Indonesia) decided to raise its benchmark interest rate by 25 basis points (bps) to 6.00 percent after its October 2023 monetary policy meeting (held on 18-19 October 2023). Meanwhile, it also raised its deposit facility and lending facility by 25 bps, each, to 5.25 percent and 6.75 percent, respectively.

Read more ›

The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate at 5.75 percent at the two-day policy meeting on 20-21 September 2023. The lender of last resort also kept its deposit facility and lending facility rates at 5.00 percent and 6.50 percent, respectively.

Read more ›

In line with expectations, the central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (BI 7-Day Reverse Repo Rate) at 5.75 percent after the two-day policy meeting on 15-16 February 2023. It also kept its deposit facility and the lending facility at 5.00 percent and 6.50 percent, respectively.

Read more ›

At the latest annual meeting of Indonesia’s central bank (Bank Indonesia), this lender of last resort presented a white paper on the digital rupiah (central bank digital currency, or CBDC). Just like what is happening abroad (and likely also in response to the rise of cryptocurrencies), Bank Indonesia is eager to launch a digital rupiah, possibly ultimately aiming to gradually phase out the use of physical money (notes and coins).

Read more ›