Inflation: Indonesia’s Competitive Factor

Indonesia having the financial stability amid the threat from the Fed’s monetary normalization stance is one of investment priorities.
The trend of decline in inflation constitute as Indonesia’s competitive power and underpins the trend of low interest rate reference when the others emerging central banks embark on increasing interest rate. Compared to other three emerging countries (Malaysia, Thailand, and the Philippines) in ASEAN, Indonesia since the mid of 2017 has the low volatility in inflation settling at the declining trend.

Fundamental Factors Guarding Rupiah Stability

Since the global market volatility appeared in the end of January 2018, rupiah as one of emerging currencies depreciated by 3.3%. The global volatility arising from the possibility of the Fed’ faster monetary tightening pace causes global investors to review the trend of massive depreciation occurred in 2013-2015 bolstering rupiah to stand in the highest position of 14,693. However, rupiah standing stably at the range of 12,900-14,000 within the last two years (2016-2018) is a robust fundament al factor curbing further depreciation as such rupiah is capable of being destabilized only by a stronger potent driver.

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