Many Indonesians fear IDR will touch Rp15,000 as the global sentiments show negative vibes. (Image via Market Bisnis)

Experts: IDR might go down to Rp15,000 if COVID-19 keeps raging

Alfonsus Adi Putra
Politics & Economic
Economic
Feb 29, 2020
1866
Indonesian economists predicted IDR’s exchange rate may exceed Rp15,000-ish in the months to come, triggered by the external sentiment of the novel coronavirus (COVID-19) outbreak. Since IDR’s exchange value is externally sensitive, any negative sentiments from the world will affect it as well.

IDR’s weakening happens as foreign investors withdraw their funds from Indonesia. Capital outflow is already seen since January 2020. While the rate still shows Rp13,000-ish/USD, it only took time for IDR to falter back to the Rp14,000 zone. And, it is evident now.

Moreover, IDR’s weakening is walking hand in hand with the correction in the IDX Composite. The year-to-date (YTD) rate from the beginning of 2020 to 27 February 2020 is corrected by 10.92 percent. Indonesian Stock Exchange also showed the YTD’s net sell rate at Rp4.7 trillion. Therefore, whatever happens in the Stock Exchange will affect IDR.

As the economy runs uncertain, IDR’s flow will worsen. If the confirmed cases in countries rise, IDR will find it hard to return to the green zone.

While global sentiments’ effect on IDR will affect the currency in two to three months, if the COVID-19 is not solved quickly, IDR will weaken further. Therefore, the economists said that the Indonesian government should give positive responses to regain investors’ trust. If the investors’ trust cannot be obtained, they will move to safe-haven assets such as U.S Dollar (USD) and gold.

One of the ongoing trends in Indonesia is the Omnibus Law Bill on Job Creation. If the construction of the law is done accordingly, the positive sentiment will support IDR.

Indonesian economists believe that IDR will not touch the Rp15,000 zone, as the government cooperates with Bank Indonesia (BI) to monitor the growth. Should the conditions worsen, there are protocols for it. Currently, Indonesia’s economic situation is conducive enough to break IDR’s fall.

Source: https://bit.ly/2wg1NKZ

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