Italy Crisis Affect Emerging Market. The exchanges rate of the rupiah against the US dollar again weakened at the close of trade Thursday (4/10), post crisis that happened in Italy into a new negative sentiment to rupiah. Previously, rupiah gets pressure from negative sentiment rises in the Fed rate and trade war. Italy made the Euro exchange rate weakened and the US dollar more solid.
Investors shifted their funds to assets came to dominate US dollar, creating demand for the US dollar increased, and investors are relatively avoided emerging market countries currency. As information, the exchanges rate of rupiah in the spot market weakened 0.69% to as low as IDR15,179/USD on Thursday (4/10). As for the exchanges rate of rupiah in Bank Indonesia weakened 0.29% to as low as IDR15,133/USD.
The Italy Government’s budget deficit makes the political crisis in the countries, and the markets participants do not predict the crises will increase its escalation. Previously, the volatility of the emerging market currencies is dominated by negative sentiment Fed Funds Rate and a trade war.
The markets participants saw that the US dollar is still safe and have positive prospects, both in the short and long-term. Meanwhile, there has been no positive sentiment in the near future for rupiah, making the rupiah is expected to move sideways with a tendency to weaken.
On the other hand, the Indonesia Government has already committed to lowering its State Budget (APBN). One of them i.e. increase the policy rate income tax (PPh) of 1,147 import goods, which is the imports of consumer goods and manufactured within the countries. Likewise, with policies on fuel (BBM) which is the largest import component, with the hopes that the applications of a 20% bio diesel (B-20) can reduce the deficit.