JAKARTA (TheInsiderStories) – Rupiah and Jakarta Composite Index (JCI) rebound on Thursday’s trading after President Joko Widodo announced cabinet reshuffle by replacing key economic ministers in his Working Cabinet.
On Thursday’s trading, JCI closed at 4,592.07, rebound 2.51 percent compared to previous day’s close at 4,479.49 points and rupiah retreated 0.24 percent from Rp 13,800 to a US dollar in previous day’s close to Rp 13,767.50 on Thursday, based on Bloomberg data.
Former central bank governor Darmin Nasution was named to the most important post, namely the Coordinating Minister for the Economy, while prominent private equity executive Thomas Lembong was appointed as the new trade minister. Four other ministers were also replaced.
“I made this decision in response to the economic situation in the country, which is being affected by the global economic downturn,” Widodo said.
Firmansyah, economist from Paramadina University said that the market players have been familiar with Darmin and are confident that he can lead the economic team to reach the economic growth target of more than 5 percent in this year.
While, Harry Su, analyst from Bahana Securities added that President Widodo’s decision to appoint Darmin Nasution as Coordinating Minister for Economy and made no change on the Ministry of Finance post was in line with market expectation.
“Interestingly, no significant change has occurred within the fiscal team, although the government’s spending has been the main focus for the economy. We do not expect any surprises on the fiscal side for the rest of the year,” he said.
Governor of Bank Indonesia (BI) Agus Martowardojo told reporters the central bank remain focused on maintaining macroeconomic stability amid heightened global uncertainties following the devaluation of the Chinese Yuan. He sees that the Yuan depreciation will continue until China is certain that its currency is more competitive than the South Korean won and the Japanese yen.
This will mean that the Yuan might continue to edge lower against the dollar, which will affect emerging-market currencies. The pressure for the dollar strengthening also comes from the expectation for rate increases in the U.S., the governor said.
Agus said from January to August (ytd), Rupiah has depreciated by 10.16 percent compared to end of last year. Other currencies such as won dropped 8.35 percent at same period, Thailand bath 6.62 percent and yen 3.96 percent. While, Malaysia ringgit dropped 13.16 percent, Turkey’s Lira dropped by 16.23 percent, Brazil Real 29.4 percent and Australian dollar dropped 10.6 percent.
According to the BI governor, Rupiah has depreciated too far against the U.S. dollar in the last few weeks. In response to this, Agus said, the central bank would stay in the market to take steps to stabilize the rupiah.
“BI will optimize its policy measures and continue to coordinate with the government and other authorities,” Agus stated.
Chairman of Financial Service Agency Muliaman Hadad added that the capital market condition now is in positive territory after dropping 3.1 percent on Wednesday. He expects the market dynamics will go on and the improvement continues.
“Our desire is to maintain stability so that nation’s financial market is well maintained,” he said.
the same location, Darmin appreciated the policies that have been taken by the Financial System Stability Coordination Forum (FKSSK) to make economic condition to be more stable. He expects the government and financial authorities make policies, not only based on industries’ perspectives but also based on the economy’s real (productive) sector. (*)
Facebook
Twitter
RSS