Here are excerpt from statement released by Bank Indonesia (BI) after its
policy meeting:
ToyotaSurabaya.com: "The global economy has started improving as shown by the latest development in numerous financial indicators, such as world stocks markets and the sharp decline in the risk premium spread."

"This has triggered capital inflows to the emerging markets, including Indonesia, leading to Rupiah strengthening, a rise in Indonesia's composite index and better yield for government debt paper."

"The banking industry remains healthy. The Capital Adequacy Ratio (CAR) was still quite high at 17.4 percent, while gross non-performing loans (NPL) remained under control, below 5 percent."

"Liquidity in the banking sector, including liquidity in the interbank money market, has improved and third-party funds increased."

"Loan disbursement in the first quarter was not yet optimum, although it is expected to improve in the second quarter."



Inflation

Indonesian's annual inflation fell to 7.31% in Apr'09, down from 7.92% in Mar'09. The data was below expectations and the lowest level since December
2007 when it was 6.59%.

Monthly deflation was driven largely by a sharp 1.3% mom decline in food prices as April continues to be the seasonal harvest peak, as well as a -1.7% mom change in clothing price component, likely due to the correction in gold prices.

Other major components of Indonesia's CPI basket, particularly the housing/utilities and transport/communication components, had muted price pressures in the last month.

Citibank revise their average inflation forecast for 2009F from 5.9% to 5.5%, while 2010F edges down slightly to 5.4% from earlier forecast of 5.5%.

BI Rate

Indonesian's central bank cut its policy interest rate by 25 bps on Tuesday, as expected, to spur consumer spending and lift growth in the face of the global downturn. The central bank has cut its benchmark by a total 2.25% points since December bringing the rate down to 7.25%, the lowest since it was introduced mid 2005.

Bank Indonesia forecast the country's economic growth in 2009 at between 3 - 4%. While, inflation is estimated to reach the lower end of the 5 - 7 % range this year. By the end of April, the foreign exchange reserves increased to $56.67 billion.

FX

The Indonesian rupiah hit a six-month high yesterday after the central bank cut interest rates. The Indonesian rupiah rose as much as 0.9 percent to 10,400 per dollar.

IDR strengthened against USD on Tuesday, due to speculation overseas investors will increase purchases of the nation's assets as a global economic recovery bolsters risk appetite.

In addition, foreign exchange reserves reached USD 56.6 billion at the end of Apr-09, from USD 54.8 billion by end of Mar-09.

Equity Market

Totally Indonesian stocks has strengthened as much as 9% since last week, which dominated largely by foreign investors fund and positive economic data such as the deflation rate of 0.31% that was announced last Friday. Though the Indonesian stock is predicted to continue its bullish momentum, profit taking action might become the resistance for today's trading. Indonesian's Composite Index rose 26.26 points, or 1.48% to close 1,798.34, boosted by miners such Aneka Tambang, which soared to 7.84%, BUMI Resources, which jumped 5.36%.

Commodity Market

Crude oil rose after an industry report showed that U.S. supplies of the fuel declined last week, increasing optimism that energy demand will recover soon. The American Petroleum Institute report, released after the end of floor trading yesterday, showed crude oil inventories fell 1 million barrels to 373.8 million last week. 1 Barrel = US$ 50.75