Indonesia Stock Market & Rupiah Update: Influence from China & USA
Stock markets in Asia are mixed on Monday (10/08) with Indonesian stocks heading downwards. In the first trading session, Indonesia’s benchmark stock market (Jakarta Composite Index) fell 0.99 percent to 4,723.19 points on weak trade data from China and positive labor data from the USA. Meanwhile, Indonesia’s rupiah is moving sideways. At 13:12 pm local Jakarta time, the rupiah was still at IDR 13,541 per US dollar according to the Bloomberg Dollar Index, unchanged since the opening this morning.
Negative sentiments originate from China after Chinese authorities released data (over the weekend) that show China’s July trade declined by unexpectedly wide margins, signalling that its economy is still plagued by weak domestic and global demand. Exports fell by 8.3 percent (year-on-year) and imports by 8.1 percent (y/y). Being the major force in Asia, weak Chinese trading data tends to have a negative impact on assets in key trading partners, such as Indonesia. However, China’s benchmark Shanghai Composite Index actually jumped significantly on Monday’s trading day, hence continuing extremely high volatile behavior ever since a peak in June 2015.
Positive data stemmed from the USA as the world’s largest economy added 215,000 jobs in July 2015, indicating that the US job market continues to improve and may make the US Federal Reserve decide to raise US interest rates sooner than later (perhaps even as early as September). As a result the Dow Jones Industrial Average recorded its seventh day of consecutive decline last Friday.
Rupiah Exchange Rate
It is suspected that the central bank of Indonesia (Bank Indonesia) continues to intervene in markets to support the rupiah. Last week it was reported that Indonesia’s foreign exchange reserves fell by USD $40 million to USD $107.6 billion at the end of July 2015 as Bank Indonesia used part of the reserves to support the ailing rupiah.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) remained at IDR 13,536 per US dollar on Monday (10/08). The currency has weakened 8.8 percent against the greenback year-to-date.