Political Uncertainty Pressuring Rupiah

Indonesia’s government is looking fragile ahead of the February 14 election. President Jokowi is apparently working to keep his cabinet together as a number of ministers are considering resignation to protest the President’s support for Prabowo in the upcoming vote, who is not his party’s candidate. The age restriction requirement was waved for Jokowi’s son Gibran to run as Prabowo’s VP.

• USDIDR is up 0.5% today to 15775 after a high of 15795. Bank Indonesia intervened in the FX market today to stabilise the currency and said “rupiah weakening is still under control”.
• Senior members of the cabinet considering resignation include the finance, foreign and public works ministers, according to anonymous Bloomberg sources. Decisions have not yet been made and things could easily change but they apparently don’t approve of the President not supporting the PDI-P’s own candidate Ganjar. The sources have said that any resignations may not be announced straight away given the impact on the IDR, which has already reacted to the headlines.
• The President has said that he is “allowed to campaign, allowed to take sides” as that is democracy but he can’t use “state facilities”.
• Jokowi’s term does not finish until October and so resignations could disrupt policy continuity.
• Prabowo is well ahead in opinion polls to replace Jokowi but it is uncertain whether he can pass the 50% hurdle in February to avoid a runoff in June.