JAKARTA (TheInsiderStories) – President Joko Widodo evaluated the impact of Renmimbi (RMB) movement, Hong Kong riots and other global issues on Indonesian economy, said an economic minister today (08/13). As known, United States (US) President Donald Trump has announced to put more tariffs on Chinese goods after the last meeting in Beijing couple weeks ago.
The escalation of the US – China trade war pushed the Chinese Yuan through the key 7.0 threshold against the Greenback on August 5, for the first time since May 2008. It said, the weaker of Renmimbi will help to mitigate the impact of the latest round of US tariff measures on the competitiveness of Chinese exports.
However, the Chinese currency’ slide has triggered a strong response from Washington, with the US Treasury acting immediately to designate China as a ‘currency manipulator.’ As a result of this decision, Treasury Secretary Steven Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’ latest actions.
Some analysts rated, the global uncertainties are estimating will create more uncertainty in the financial market and make the Jakarta Composite Index (JCI) movement slowing down in the next couple of days. The influence is also expected will affect the Rupiah movement, they said.
Today, according to economist of the Institute of Economic Development for Economics and Finance Bhima Yudhistira Adinegara, the most influential global factors for JCI and Rupiah were the Hong Kong riots. The riots, he noted, tend to disrupt business activities in the region cause Hong Kong is one of the international financial hub in Asia.
“It could worsen the performance of the global economy, especially since there is no agreement related to the trade war. If conditions in Hong Kong heat up the US will impose heavier sanctions on China,” he said today.
By seeing this, Adinegara sees that the domestic exchange rate could weaken to around 14,370 – 14,400 against the US Dollar. To date, the Rupiah at 14,320 over the Greenback. He expect the Hong Kong affect and trade war will continue until 2020.
Beside, global issues, he opined, the domestic factors also influenced the local market. But he believed, as long as economic growth maintained at 5 percent, investors still enter the Indonesian market.
Meanwhile, Director of Research and Investment PT Pilarmas Investindo Securities Maximilianus Nico Demus said, the Hong Kong riots and a trade war would weaken JCI in the short term and middle term. At the time of this news airing, JCI was down 0.48 percent to the level of 6,220.61.
Aside from that, investors also paid attention to the problematic conditions in Argentina. “The potential crisis in Argentina is expected to have a shock effect for other emerging market countries,” he said.
On Tuesday, almost all of the Asian stock markets were affected. Nikkei decreased by 1.14 percent and Strait Times lowered 0.66 percent. In a week, foreign investors have booked net sales of Rp182 billion (US$12.81 million) and Rupiah has weakened 0.35 percent to 14,305 versus the US Dollar.
by Linda Silaen, Email: email@example.com