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IDX closes May at yearly low amid weakening rupiah
The recent decrease in the index has been attributed to a weakening rupiah as well as a drop in the stock prices of large market cap companies.
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People walk past a screen showing Indonesia Stock Exchange (IDX) prices in Jakarta in March 2020. (AFP/Adek Berry)
T
he Indonesia Stock Exchange (IDX) Composite index closed Friday’s session down 0.9 percent at 6,970 points, its lowest level so far this year.
Afif Abdullah, a retail equity analyst at brokerage and investment services firm KB Valbury Sekuritas, attributed the drop to negative sentiment caused by the rupiah’s depreciation against the US dollar.
Strong economic data from the United States has dashed hopes for a swift reduction in the federal fund rate, creating a tailwind for the greenback.
The IDX previously hit a low of 7,036 points in April as the rupiah also bottomed out at around Rp 16,300 per dollar. The negative trend pushed the central bank to raise the benchmark interest rate, which strengthened the rupiah before it weakened again at the end of last month, reaching Rp 16,250 per dollar on May 31.
Following a cumulative decline of 3.5 percent in the course of last week, the IDX bounced back on Monday to end the first session of the day up 1.45 percent at a reading of 7,072.
The increase aligned with a rally in Asian stock markets as investors looked forward to a rate cut in Europe and possibly Canada.
Newly released economic data for May, such as the private Caixin survey showing a pick-up in China’s main factory index to a two-year high of 51.7 and Japan’s factory activity expanding for the first time in a year, also supported stock markets on Monday.
