Indonesia stock index nudges up ahead of Bank Indonesia’s rate decision

In early Wednesday trading, the Indonesia Stock Exchange Composite Index climbed 0.33% to 6,297.95, with the LQ45 index up 0.25% at 627.17, as investors took a wait-and-see approach before Bank Indonesia’s Board of Governors meeting. Phintraco Sekuritas researcher Ratna Lim noted the index could test the 6,186-6,200 band, while the central bank is expected to keep its benchmark BI Rate at 5.75% after the Federal Reserve’s recent hike narrowed the rate spread to 1.75 percentage points.

Despite the narrowing, the spread remains wider than the three-year average, a gap the bank seeks to preserve to attract foreign capital and support the rupiah. Any further rate increase would likely depend on a weakening rupiah, a resurgence in US rate hikes, or inflation moving above target, while falling oil prices are easing price pressures. Investors also await August credit-growth figures, projected to rise 15% year-on-year, and monitor global cues such as UN General Assembly talks on US-Iran relations.