BOTTOM LINE: Capital outflows escalated in September and worsened the depreciation of rupiah despite the deflation. Bank Indonesia kept its monetary policy rate at 4 percent in a bid to stabilize the rupiah. Foreign reserves dropped to US$135.1 billion, largely used by the central bank intervening money market for avoiding further weakening of rupiah. In spite of lingering uncertainties, the first two weeks of October signified early signs of improved economic indicators.

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