BI: Indonesia`s Economic Figures to not be Affected by Brexit

TEMPO.CO, Jakarta-The Governor of Bank Indonesia (BI), Agus Martowardojo is adamant that the United Kingdom's (UK) decision to leave the European Union (EU) will not significantly impact Indonesia's economy.

Earlier in the afternoon, the Brexit referendum concluded with the decision to leave the Union - with 52 percent of the voters choose to 'Leave', while 48 percent of the voters choose to 'Remain' in the Union. As a result, the UK will separate itself from the supranational organization after having been a member for 43 years. 

Market responses are varied immediately after the decision was announced - and similar volatility is to be expected in Indonesia - despite its geographical distance.

"This is indeed a cause for worry - but generally speaking, Indonesia's economic figures are sufficient enough for it to withstand the economic shock that the Brexit may cause," said Agus at Bank Indonesia's (BI) Complex in Jakarta on Friday, June 24, 2016.

He said that the impact of the Brexit could already be observed after the polls went in - with the British pound losing its value by 10-11 percent, putting it in a trading position against the greenback that were last seen three decades ago. The euro, he continued, also experienced a significant depreciation, with the currency slipping slightly by 1-2 percent.

Meanwhile, the rupiah, continued Agus, has managed to continue to trade at Rp13,260 per US dollar - with the currency managing to maintain a 4 percent year-to-date increase. "That said, since the polls were announced, the rupiah has weakened to trade at Rp13,400 per US Dollar - which is a one percent depreciation," he said.

Agus does agree that the Brexit will have an impact to the global economy - as investors will become more risk-averse after the opt-out has been completed. "This will cause capital flight, as investors will run in hordes to hunt for safe haven assets from more stable economies - such as the United States and Japan," he said.

That said, Agus remains adamant that Brexit will not have a significant direct impact on Indonesia's economy. "Trade between the UK and Indonesia is limited in nature - and our export and import balance are not too significant for the Brexit to wreak havoc on trading," he said.

"However, capital flight is an issue that Indonesia has too remain vigilant about," finished Martowardojo.

GHOIDA RAHMAH