Markets in Indonesia Positive ahead of Official Presidential Election Result
One day ahead of the official result of the Indonesian presidential election, the benchmark stock index of Indonesia (known as Jakarta Composite Index or IHSG) showed a good performance as market participants seem to speculate not only on a Joko Widodo win, but also on a peaceful and orderly course of events (no large scale demonstrations or riots). On Sunday, president Yudhoyono received both presidential candidates at the State Palace for dinner. This may have helped to cool some of the tension between supporters of both sides.
Although foreign investors recorded net selling (but only slightly), the index was supported by today’s appreciating rupiah exchange rate. The IHSG climbed 0.79 percent to 5,127.12 points on Monday (21/07).
It was interesting to follow the performance of the rupiah today as it did not follow the performance of other emerging Asian currencies that weakened due to the influence of the Ukrainian-Russian conflict (exacerbated by the Malaysia Airlines shooting). Market participants are still optimistic about the presidential election result, as well as the limited inflation forecast for July. Traditionally this month brings along inflationary pressures due to the holy fasting month of Ramadan and Idul Fitri celebrations.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 1.10 percent to IDR 11,577 per US dollar on Monday (21/07).
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