TEMPO.CO, Jakarta – The House of Representatives' (DPR) decision to pass the law scrapping direct local elections last night immediately hit the currency rate. Today, the rupiah is traded for a low rate of 12,007 per US dollar.
"Global conditions have led to the weakening of the rupiah, and last night's political decision pushed the rate further down," Juniman, Bank Internasional Indonesia chief economist told Tempo Friday, September 26th.
Juniman said the rupiah has been on a downtrend since global conditions began to worsen. He said that since after the IMF corrected the global economic growth, the entire financial fundamentals structure moved down.
"External conditions are negative, coupled with the current political situation," he said.
Agus Susanto from Asia Financial Networks, said the stock price index in today's trade is also affected by last night's voting result. "The defeat of Joko Widodo and Jusuf Kalla's party coalition indicated that the future government is faced with a bargain in making policies," Agus said via text message.
Last night, the DPR agreed to amend the law on regional elections, which will see local assemblies choosing their leaders as they did in the pass. The bill passed 226 votes to 135, in a parliament where Jokowi's supporters are in a minority. The bill, opposed by Jokowi, was hailed by the Red and White coalition of losing presidential candidate Prabowo Subianto.
AYU PRIMA SANDI | GANGSAR PARIKESIT