30 March 2020 (closed)
USD/IDR (16,367) +31.01 +0.19%
EUR/IDR (18,045) -78.54 -0.43%
Jakarta Composite Index (4,414.15) -131.07 -2.88%
Most of us who were hoping for a limited weakening of Indonesia's benchmark stock index (IHSG) today (27/08) were to be disappointed. Instead of a limited decline, the IHSG fell 3.71 percent to 3,967.84 points. Market participants are concerned about both the global and domestic economy, thus pulling money out from Indonesia. The weakening rupiah and weak stock index openings in Europe (due to tensions in Syria) pushed the IHSG further down into red territory. Foreign investors were again net sellers of Indonesian assets.
Similarly, there are still no positive sentiments that can reverse the Indonesian rupiah's weakening trend. Pro and contra regarding the weakening of the currency results in a mixed yet weakening trend as market participants keep selling their rupiahs, despite the fact that the US dollar is falling against the Yen and Euro as the United States plans military actions against Syria. These political tensions cause market uncertainties. Moreover, the looming 'tapering' of the Federal Reserve's quantitative easing program keeps investors in a worried state of mind.| Source: Bank Indonesia
Indonesia's House of Representatives (DPR) assesses that the continued weakening of the rupiah is not only because of the current account deficit but also due to currency speculators and because of the Finance minister's (Chatib Basri) statement that the Indonesian economy is currently in an unusual state but one which cannot be labelled a crisis yet.
The movement of Asian stock indices today (27/08) were influenced by the weakening indices on Wall Street yesterday. China's main index, however, was able to bounce up after the release of companies' profit growth in July. Still, market players are cautious. Not only because of the possible end to the quantitative easing program but also due to political tensions in connection with Syria. Lastly, negative market sentiments are also caused by continued news about capital outflows from Southeast Asia, which make it inevitable for the indices to weaken.
European indices fell significantly amid heavy concerns about the US invasion in Syria and the Treasury Department's announcement that it would hit its borrowing limit in mid-October and thus unable to pay all of its bills soon after that time. Wall Street, which is still open at the time of writing, was down immediately after opening.