Indonesia's Forex Reserves US$124B in March
Bank Indonesia (BI) noted foreign exchange reserves of the country slightly lowered to US$126.6 million from a month ago $126.7 million - Photo: Special

JAKARTA (TheInsiderStories) – Good morning. Expects more pressure on the financial market and especially the Rupiah as external environment continues to work against Indonesia’s favor.

The Rupiah ended down at 14,840 per US$1 on Tuesday (04/08), closer to the 15,000 per US$1, seen by many as the pain threshold for some financial institutions. The Jakarta Composite Index also fell 1.0 per cent to 5,905.3 with foreign sold equity worth Rp431.3 billion.

Bank Indonesia (BI) appeared to be powerless to stave off the pressures despite its Governor Perry Warjiyo said the central bank had intervened ‘heavily’ in both the currency and bond markets today. He added, BI will also start to evaluate whether currency speculation has any influence in the Rupiah’s drop over the past couple of weeks.

In reality, BI and the government can only ease the pressures as external dynamics are the main reasons why Indonesia is caught in the whirlwind due to risk-off behaviors on emerging market assets.

There is more bad news that add to the emerging market’s gloom. In addition to ongoing financial crisis in Turkey and Argentina, it is just announced that South Africa is in a technical recession as its economy contracted 0.7 per cent in the second quarter.

This development will add to the narrative of the rising risks on emerging market assets and encouraged investors to put their money into safer instruments.

Furthermore, the announcement that the United States’s (US) manufacturing activities expanded at the fastest pace since 2004 brings more reasons for investors to pull out from emerging markets. The expansion in manufacturing activities showed that the US economy continue to grow at accelerating pace.

Worries of trade war are still looming large after the US and Canada failed to strike a deal that will replace the North American Free Trade Agreement. Furthermore, threats from the US President Donald Trump that the world’s largest economy will leave the World Trade Organization also has a major influence on the negative sentiment for emerging market.

Surprisingly, the opposition’s reaction on the rupiah’s fall is rather muted. However, the opposition used the momentum to again bring forth the issue of Indonesia’s debts which according to its Presidential candidate Prabowo Subianto is accumulated at a rate of Rp1 trillion per day.

Moving to politics, the opposition camp rejected a plan by the General Elections Commission (GEC) to announce the final list of eligible voters for the 2019 general and presidential elections.

The agency had recorded a final list of 186 million eligible voters for next year but the opposition alleged that at least 25 million of them are illegal due to ‘double registrations’. This final list is schedule to be announced today.

GEC’s commissioner Viryan Aziz admitted that the issue of double registrations could occur in the final list but the number will be far less than 25 million.

May you have a profitable day.

TIS Intelligence Team, Email: