Rupiah Fears Subside, Rises for Oil

After last week's Jakarta terrorist attacks, the rupiah interest rate cut that followed and a month into the US dollar interest rate hike, the rupiah appears surprisingly stable, hovering just below the Rp14,000 per US dollar level. This appears to bode well for the domestic economy, which has been slow to recover. A more stable rupiah coupled with a lower interest rate should help revive the lackluster economy. Growth estimates for 2015, which is around 4.7 percent, is projected to rise this year to 5.2-5.3 percent. But this brighter optimism looks short-lived, as the external environment shifts from better to worse.

Leading this market gloom is the continued fall in oil prices, followed by rising concerns where China's economy is heading and the one bright spot in the world economy, the recovering US economy, looking less sparkling with time. So what does all this mean for the Indonesian economy?