The Pros and Cons of the Omnibus Law are Decreasing, the Rupiah is Closed Strongly

JAKARTA, KOMPAS.com – The rupiah exchange rate against the US dollar at the close of trading in the spot market strengthened on Wednesday (7/10/2020).

Citing Bloomberg data, the rupiah closed up 25 points or 0.17 percent this afternoon at the level of Rp. 14,710 per US dollar, compared to the previous close of Rp. 14,735 per US dollar.

Director of PT TRFX Garuda Berjangka Ibrahim said that the strengthening of the rupiah today was driven by pros and cons due to the dwindling Omnibus Law Law. This resulted in the flow of foreign funds back into the domestic market and raised the rupiah exchange rate against the US dollar.

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“The contents of the Omnibus Law are all embracing and the market is friendly again after knowing this. So that the pros and cons are getting smaller and the market is optimistic again. It is only natural that foreign capital will return to park in the domestic market, “said Ibrahim.

Ibrahim said that yesterday the market was turbulent due to the rejection of the Omnibus Law on Job Creation by students and labor unions. In fact, many foreign investors regretted the ratification of this bill into law.

The movement of the rupiah was also encouraged by President Joko Widodo’s plan to issue Presidential Regulation (Perpres) Number 99 of 2020 concerning the procurement of vaccines and implementation of vaccinations in the context of the Covid-19 pandemic.

The Perpres regulates the matter of procurement and distribution of the covid-19 vaccine. The vaccine procurement process is carried out by the state-owned company PT Bio Farma (Persero). Meanwhile, the type and quantity of the Covid-19 vaccine will be further determined by the Minister of Health.

Also read: Job Creation Law Opens Opportunities to Boost Foreign Investment in the Agricultural Sector

On the other hand, the rupiah was also driven by external sentiment. President Donald Trump has left the US fiscal stimulus negotiations until after the presidential election in November 2020.

Trump has accused the Speaker of the US House of Representatives, Nancy Pelosi, of not negotiating with good intentions, and the stimulus has nothing to do with Covid-19.

“The move gives a boost to the prospect of further stimulus, which according to Federal Reserve chairman Jerome Powell is needed to ensure a strong recovery,” Ibrahim explained.

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