When are the Indonesian general elections and how could they affect USD/IDR?

Overview

The Indonesian general elections will be held on 17 April 2019. For the first time in the country's history, the president, the vice president, and members of the People's Consultative Assembly (MPR), will be elected on the same day with over 190 million eligible voters. There will be sixteen parties participating in the elections nationally, with four participating for the first time. Eyes will be on the race between the incumbent Joko Widodo and former army general, Prabowo Subianto - it is expected to be a close call but pollsters are predicting a victory for the incumbent. However, a surprise win by the opposition cannot be ruled out if the turnout rate is lower than expected.

Key dates:

• April 17, 2019
• Polling Day.
• April 25 to May 22, 2019
• Progressive release of the results of the general election.
• Oct 1, 2019
• Inauguration of lawmakers.
• Oct 20, 2019
• Inauguration of the President and Vice-President.

How could this affect USD/IDR?

The rupiah has come under considerable pressure in recent times and has dropped to as low as around 15,000 against the U.S. dollar, down from 10-11,000 from just a few years ago which is a hot topic at the moment while imports have been outweighing exports with stagnating growth around a bit over 5 percent.

"The broader thrust of economic policies between the two camps is not markedly different, a win by the opposition could still introduce some uncertainty in the near term, not least because they are untested in governing," analysts at ANZ Bank pointed out. 

Moreover, a strong currency policy would be welcomed by both parties as it would be advantageous for Indonesia’s government debt position and as such, there is little bias one way or the other and a stable outlook is most likely while stable political conditions will only contribute to that view - Afterall, the Bank Indonesia is committed to maintaining a favourable exchange rate through sales of foreign exchange reserves when necessary. The recent range has been limited to 13900-14400. "We believe Bank Indonesia (BI) will not rush to cut interest rates until there is a material narrowing in the current account deficit. Overall, we see modest upside for the IDR and remain constructive on duration," analysts at ANZ bank explained.

• USD/IDR Technical Analysis: Break of 50-day SMA highlights 23.6% Fibo. surrounding 14,055

About the Indonesian general elections

The presidential election will follow a simple majority system whereby the incumbent Indonesian President (Jokowi) or, Joko Widodo will run for re-election with senior Muslim cleric Ma'ruf Amin as his running mate - They are up against the former general Prabowo Subianto and former Jakarta deputy governor Sandiaga Uno for the five-year term between 2019 and 2024. There are a total of 711 seats at stake in Indonesia's two-house People's Consultative Assembly. Also open for contention are more than 19,500 seats in over 2,000 regional, municipal and regency legislative council electoral districts.