In a move which could spark some near-term uncertainty, both leading candidates for the election - incumbent Joko Widodo (Jokowi) and challenger Prabowo Subianto - both declared victory despite a lack of official election results.

Speaking to reporters, President Jokowi said We are still waiting for the General Election Commissions official count. But 12 pollsters have given clear results … stating the Jokowi-Maruf ticket got 54.5 per cent of the vote while Prabowo got 45.5 per cent.

Meanwhile Prabowo told reporters I repeat today, I am Prabowo Subianto, stating that Sandiaga Uno and I declare victory as the president and vice-president of Indonesia … with 62 per cent of votes.

Official results arent expected to be released until May 22nd, however a confirmation of a Jokowi re-election is expected to bode well for the Rupiah with analysts forecasting the USD/IDR to breach current support at 14000 to target 13895.

APRIL 18: Both the Jakarta composite index and Indonesian Rupiah were up during Thursdays session in the wake of unofficial election results which indicated that incumbent President Joko Widodo (aka Jokowi) was on track to secure a second term in office.

Currently trading at 14040, the US Dollar to Indonesian Rupiah briefly breached support at 14000 earlier in the session for the first time since late February.

Despite the upbeat outlook reflected by currency markets, a number of institutional analysts expressed doubts that Jokowis radical reforms could be stifled by a divided parliament. They said that a failure to push through major reforms would leave Southeast Asias largest economy struggling in the face of a tough external environment.

Priyanka Kishore, head of India and Southeast Asia economics at research firm Oxford Economic wrote A fragmented parliament and external vulnerabilities have held back Jokowis ambitious reforms and infrastructure spending plans over the last five years, adding Both of these factors are likely to continue casting a shadow over his second term as well, in a report on Wednesday.

While quick counts and exit polls suggested that Jokowi is set to widen his lead over former army general Prabowo Subianto, whom he narrowly beat in the 2014 presidential election, Prabowos Great Indonesia Movement Party was also expected to increase its number of seats in parliament, which could increase political friction and make it difficult for the government to pursue their proposed reforms.

Head of Southeast and South Asia at risk consultancy Eurasia Group, Peter Mumford, said Jokowis victory ... will be insufficient to break him free of the constraints of coalition partners and vested interests - elite political, military, religious and state-owned enterprise (SOE) leaders, adding Thus, we are not optimistic that Jokowi will use his second term to push ahead with serious structural reform.

Alternatively, some speculators feel the fact that this is Jokowis final term put him in a nothing to lose position.

Speaking to CNBC, Finance Minister Muhamad Chatib Basri said He doesnt need to worry whether he will get reelected again by 2024 so he could do something more, but we have to wait (and see).

With the official election results expected to be withheld until May 22nd, markets will have to make do with unofficial results in the interim with the obvious near-term risk that the early releases dont reflect the actual outcome. Once confirmed, the parliamentary make-up could provide some indication as to how much opposition Jokowi is likely to face moving forward with, from an economic perspective, the less the better.

On the post-result prospects for the Indonesian Rupiah, Maybank analysts wrote Should official results confirm the Jokowis win, the IDR should remain buoyed by expectations of policy continuity and acceleration in infrastructure spending together with further fiscal policies to tame the twin deficits.

They added that near-term Market optimism over a Jokowi victory should be market positive and encourage further inflows into both equities and Indonesian government bonds (IndoGB). We watch for the USDIDR to break below the 14000-levels for a revisit of 13895-levels (2019 low).

Source : ExchangeRates.org.uk

Apr 20, 2019