Investors Fear Jokowi Could Lose
27 June 2014 15:10 WIB
TEMPO.CO, Jakarta – As the race to presidential palace heats up, the rupiah's exchange rate takes the toll. In yesterday's trade, the rupiah plunged 100.7 points (0.84 percent) to 12,090 per US dollar.
Economist Rangga Cipta said investors are worried that the intense competition between candidates would lead to political tensions. "If the competition gets fiercer, so will uncertainties. Hence, investors would anticipate for the worst possible post-election scenario," he said yesterday.
Rangga said the market initially believed that Joko Widodo, better known for his portmanteau Jokowi, would win the election easily. However, Prabowo Subianto's significantly increasing popularity has raised investors' concerns.
"Market participants expect a close vote, so the election is prone to possibilities of conflicts," he said.
Another issue that raises investors' anxiety is that the split vote will create an ineffective government. If the president elect does not receive a huge support from the parliament, the economy will be affected.
"The high level of uncertainty prompted market players to abandon the rupiah," said Rangga.
Lindawati Sutanto, treasury chief of Bank Resona Perdania, said the rupiah correction is closely related to Jokowi's declining electability. If the popularity gap between Prabowo and Jokowi continues to narrow, she said, investors fear that Jokowi will have difficulties in winning the presidential election.
"It is undeniable that the market is opting to wait and see because they are anxious about Jokowi's chance for victory," he said.
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