Politics at Ease, Rupiah Relies on Fundamentals

TEMPO.CO, Jakarta – Now that Indonesians in general—and the financial industry in particular—have a clearer view on domestic politics, the rupiah is expected to be less affected by political issues. Bank Mandiri chief economist Destry Damayanti said, for the time being, non-political factors have more influence on the rupiah movement.  

"Until the year-end, the rupiah will move around Rp12,200 per dollar," she said on the sidelines of the International Financial Inclusion Forum, yesterday.

"The market is also waiting for Jokowi's cabinet line-up," she added.

Prior to the political sentiments, which began since before the election rounds, the exchange rate was highly influenced by global economic factors such as the fed's plan to raise interest rates. "Indonesia, which is an open country as it gets foreign funds, would be affected. The effect is usually reflected on the rupiah," said Destry.

From the fundamental side, according to Destry, the rupiah depreciation is also influenced by external short-term debts by private sector, which jumped very quickly in 2011-2013. "The demand for US dollar was very high, eventually correcting the rupiah. Moreover, there is a limited supply of US dollars as exports weakened," she said.

Earlier, Bank Indonesia governor Agus Martowardojo said the exchange rate fluctuates because of uncertainties, since the market is still waiting for Joko Widodo's cabinet line-up and the government's decision on subsidized fuel prices.

The rupiah, which had plunged to more than 12,050 per US dollar, had strengthened to 11,950 on the day of Jokowi's inauguration. The gain did not last long, and the rupiah was corrected again to 12,030 per US dollar in yesterday's currency trade closing. 

FAIZ NASHRILLAH | MAYA NAWANGWULAN | IKA NINGTYAS | RR. ARIYANI