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Rupiah slips on Jakarta election result

Rupiah slips on Jakarta election result

SINGAPORE: Indonesian rupiah, the biggest loser among Asian currencies, fell 0.26 percent to trade at 13,330 on Thursday when polls showed that Basuki Tjahaja Purnama lost his bid for re-election as governor of Jakarta to Anies Baswedan - a former education minister.

Purnama or Ahok as he is popularly known, who was seen as a foreign-friendly candidate, lost Wednesday’s election by a huge margin, a surprise as most opinion polls had pointed to a neck and neck race between the two candidates.

The rupiah opened 0.19 percent lower versus the dollar on Thursday, following a market holiday on Wednesday, and fell further during the morning session in reaction to the election results.

But while most analysts do not expect the election results to have a sustained impact on the rupiah market, Nomura said Purnama’s defeat was slightly negative for the rupiah in the near term.

“Foreign investors and media were very impressed by Jakarta’s acceptance (as reflected in Purnama’s high approval ratings) of a non-Muslim, ethnic-Chinese Governor, and his loss will likely cause them to question Indonesia’s level of religious tolerance,” Nomura said in a note.

The precursor to this key election was a campaign that incited political and religious tensions in the world’s most populous Muslim country.

Investors also eased their positions in the Indonesian stock market, which fell marginally, following the election results, and parked their money in the three year Indonesian benchmark bond

instead, the yields on which fell to 6.613 percent, the lowest level in around five months.

More than a third of outstanding Indonesian government bonds are held by foreigners.

Other factor that kept the currency subdued was a key economic policy meeting later in the day, where the central bank is widely expected to keep interest rate steady, according to a Reuters poll.


Most other Asian currencies also fell on Thursday, as traders pared back bets ahead of the French presidential election, while weak US data, and tensions around North Korea conflict added to uncertainty.

France’s presidential election is being closely watched as the stakes for investors are high, with two anti-EU, anti-euro candidates among the four seen still in contention to make it to a second round two weeks after Sunday’s ballot.

The dollar index further weighed on EM currencies, creeping up 0.06 percent in Asian trading on Thursday, against a basket of six major rivals.

The Malaysian ringgit fell 0.02 percent versus the US dollar, while the Taiwan dollar dropped to 30.423 ahead of export orders data which is expected to show an expansion in March, a Reuters poll showed. The pace of growth, however, is seen halving from February.

The Thai baht rose marginally after the central bank said Wednesday it is ready to act on any excessive volatility in the currency.—Reuters

Currency exchange ratesDollar edges away from recent lows with French vote in focus

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