TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
RI market damped down by debt crisis in Europe
The financial market remained depressed by Europe’s debt crisis, while the appointment of Agus Martowardojo as finance minister could not counter continuing negative sentiment
Change Size
T
he financial market remained depressed by Europe’s debt crisis, while the appointment of Agus Martowardojo as finance minister could not counter continuing negative sentiment.
The Indonesia Stock Exchange composite index fell 1.3 percent to a two-month low of 2,694.25 at the closing of Thursday’s trading while the rupiah fell 0.6 percent to 9,290 per dollar as of 4:30 p.m. in Jakarta, following a 1.2 percent slide a day before, Bloomberg reported.
Earlier the currency rose as much as 0.7 percent amid speculation the central bank might intervene to counter recent currency falls. The rupiah has dropped 3 percent this month as overseas investors pulled US$179 million out of the market.
“The main factor weighing on the rupiah is losses on global stock markets due to concerns over Europe and this has caused the Jakarta stock market to fall as well,” said Lindawati Susanto, head of foreign-exchange trading at PT Bank Resona Perdania.
Agus was inaugurated as finance minister at the state palace at Thursday afternoon, replacing Sri Mulyani Indrawati who starting on June 1 as one of the three managing directors for the World Bank. The government also appointed the Finance Ministry’s director general for budgeting Anny Ratnawati as deputy finance minister.
Market sentiment on the appointment of Agus as finance minister should be neutral to positive, analysts said.
“Both Agus and Anny are professionals and are not known to have strong ties with political parties,” Bank Danamon economists Anton Gunawan and Helmi Arman said in a statement sent to The Jakarta Post.
Anton and Helmi said the new finance minister and deputy finance minister would face challenges in dealing with macroeconomic, fiscal and public policy-making. Agus and Anny are not known for their intensive macroeconomic backgrounds. Nor is Coordinating Minister for the Economy Hatta Rajasa.
“This could mean a bigger role for [National Development Planning Minister] Armida Alisjahbana in advising the government on macroeconomic policy issues,” they said.
The yield on Indonesia’s benchmark 10-year bond due in November 2020 rose four basis points to 8.94 percent, according to prices provided by the Inter-Dealer Market Association.
Bank Indonesia Deputy Governor Budi Mulya said a week ago that policy makers would maintain the rupiah’s level in line with the nation’s economic “fundamentals.”
Gross domestic product will climb as much as 6.4 percent this year, Mulyani said Thursday in her final speech to the parliament. Growth accelerated to 5.7 percent in the first quarter, the quickest pace since September 2008.
“BI is said to have sold up to $50 million today around the 9,200 level to help stem volatility,” said Ho Woei Chen, a regional economist at United Overseas Bank Ltd. in Singapore. “I don’t think BI can move the rupiah significantly. Concerns in Europe are pressuring the dollar higher and Asian currencies lower. What is happening in global markets will have a downside risk for most Asian currencies.”
