Indonesia Recession, Rupiah Strengthens Sharp to Rp. 14,380 per US Dollar. Page all

JAKARTA, KOMPAS.com – The rupiah exchange rate against the US dollar at the close of the spot market, strengthened sharply on Thursday (5/11/2020).

Launching Bloomberg, the rupiah closed up 185 points in the spot market at Rp 14,380 per US dollar, or rose 1.27 percent compared to the previous close of Rp 14,565 per US dollar.

Director of TRFX Garuda Berjangka Ibrahim said that the strengthening of the rupiah was driven by sentiment from the announcement of the Central Statistics Agency (BPS) which released Indonesia’s economic growth contracting -3.49 percent yoy.

Also read: Indonesia Officially Recession, IHSG Precisely Raced 3.04 Percent

Although it contradicts the government’s projection of -1 percent to -2 percent, this is better than the second quarter of 2020 which is -5.32 percent.

“This shows the process of national economic recovery and the turning point of national economic activity indicates the direction of the positive zone,” said Ibrahim through a press release.

With this announcement, Indonesia has experienced negative economic growth twice, so that now Indonesia is following other countries, entering into the abyss of recession.

Ibrahim assessed that the contraction, which is still showing improvement, will continue until the fourth quarter of 2020.

“It is not impossible that the economy will turn positive if this performance can be maintained and the provincial government does not implement PSBB Total,” he explained.

Economic growth in the third quarter was supported by the realization of social assistance spending and support from the business world, especially MSMEs.

The acceleration of state spending, which is rapidly increasing, has helped increase or reverse the growth in government consumption, which experienced a positive growth of 9.8 percent yoy.

However, what remains to be homework is boosting household consumption. In the third quarter, household consumption still grew negatively by 4.04 percent YoY, the cause was that the consumption of the middle and upper class was starting to be limited because the Covid-19 pandemic had not ended.

External sentiment, still related to the US presidential election.

Also read: Recession for Beginners

According to a Bloomberg vote tally, Joe Biden was up 264 votes, beating Donald Trump by 214.

However, Trump, who did not accept the vote tally, has filed lawsuits and recounts in Pennsylvania and Michigan.

If Biden manages to overcome Trump’s legal challenges and become US president, then Republicans are likely to retain control of the Senate and be able to use them to block Biden’s fiscal policy agenda.

The market is also awaiting the monetary policy decisions of the Federal Reserve and Bank of England which are likely to cut negative interest rates, due later this evening which is likely to provide positive information.

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