Market Gain

The rupiah led gains in emerging markets this week, climbing by the most since February, after unofficial counts showed Joko Widodo won Indonesia’s presidential election.

Widodo, known as Jokowi, had about a five percentage point lead in unofficial tallies by two survey companies, estimates disputed by rival Prabowo Subianto, who also declared victory in the July 9 vote. Official results will be announced by July 22. Jokowi seeks professionals for finance, energy, agriculture, public works and communication ministers, while Prabowo wants technocrats with the “best brains” in his economic team.

The rupiah surged 2.5 percent this week to close at 11,585 per dollar, the most since the five days ended Feb. 14, prices from local banks show. The currency was little changed today, ending four days of gains.

“We can see a further rally after the final result, even if much of the expectations for Jokowi’s win have been priced in,” said David Sumual, chief economist at PT Bank Central Asia, who sees the rupiah at 11,561 by year-end. “The focus will turn to the new cabinet and whether the offices, especially those important to the economy, will indeed be non-partisan.”

In the offshore market, one-month non-deliverable forwards gained 1.8 percent this week to 11,653 per dollar, trading 0.6 percent weaker than the onshore rate, data compiled by Bloomberg show. The contracts fell 0.1 percent today.

Bank Indonesia set a fixing used to settle the contracts at 11,627 per dollar, compared with 11,887 on July 4.

Volatility, Stocks

One-month implied volatility, a measure of expected swings in the exchange rate used to price options, fell 51 basis points, or 0.51 percentage point, from July 4 to 11.18 percent, data compiled by Bloomberg show.

It’s not possible for Golkar, the second-largest party and part of Prabowo’s coalition, to be in opposition, Zainal Bintang, deputy chairman of the political group’s advisory board, said yesterday. The rupiah would climb to 11,000 per dollar if Golkar aligns with Jokowi, giving him more seats in parliament, Geoffrey Kendrick, strategist at Morgan Stanley and the currency’s most-accurate forecaster, wrote in an e-mail yesterday.

Schroder Investment Management Ltd. and State Street Global Advisors said they are refraining from increasing their holdings of Indonesian local-currency debt because of the uncertainty over the election result and the country’s widening fiscal deficit and persistent current-account shortfall.

“The concern is the other side is still claiming he won,” Sumual said. “Whoever comes to power will quickly face the reality of the current-account and budget deficits.”

6 Responses to Market Gain

  1. Ulysses says:

    I see a lot of interesting content here. You have to spend
    a lot of time writing, i know how to save you a lot of work, there is an online tool that creates readable, google friendly articles in minutes, just search in google
    – k2 unlimited content

  2. Major says:

    It was difficult to find your page in google search results.

    I found it on 17 spot, you should spread your articles to social websites , it will help you to increase traffic.

    You can do it on autopilot, i know how to help you, just type in google – k2 seo tips and tricks

  3. Reinaldo says:

    You share interesting things here. I think that your website can go viral easily,
    but you must give it initial boost and i know how to do it,
    just search in google – mundillo traffic increase

  4. Hi there I located your blog by mistake when i was searching AOaL for this subject, I must tell you your blog is definitely helpful I also like the design, its cool!

  5. Gilda says:

    Your site’s graphics looks not proffesional. You schould change it.
    Better graphics means a lot more conversions, faster load and greater confidence of visitors.
    This is something that can be useful for you, type in google:

    Juicklor’s templates source

  6. I have one good idea for this site. I`ll write it tomorrow)

Leave a Reply

Your email address will not be published. Required fields are marked *