Minggu, 18 Oktober 2015

Indonesian Military Anniversary and Rupiah Rebound

Indonesian Military (TNI) Anniversary, Social Media Positive Sentiments & Investor Confident

A sudden and sharp strengthening of rupiah in any Asian Currencies rallied throughout last week starting on Monday, 5th October, astonished many analysts in disbelieved that such sudden inflection point phenomenon of strongest value gain in Rupiah against US dollar could ever happened in the midst of Rupiah crisis since beginning of 2015? Some analysts had different opinions: 1. Was it the Intervention by Bank Indonesia (BI) or the Third Government economic stimulus package ? 2. Was it some external factor, such as increase of interest rate by The Fed (Quantitative Easing), which was all economic macro factors Domestic and Global (ceteris paribus)?
Or could external political factor such as the 70th Anniversary of Indonesian Military (HUT TNI) on Monday, 5th October 2015 at Indah Kiat port, Cilegon trigger such sharp inflection point that strengthened Rupiah ? In the afternoon of 5th October President JKW speech as ceremony Chief Inspector, is it latest version of Jokowi effect?

Why focus on correlation between TNI Anniversary and fluctuation of rupiah ? The sudden inflection of strengthening rupiah starting on 5 October 2015, amids of weakening of rupiah from the Rupiah from the two diagram below:

Previously in September 2015, Rupiah was continued to weaken to the psychological lowest level of Rp 15,000, above Rp 14,700 (2/10), despite of two previous government economic stimulus to strengthen Rupiah that both failed. BI report late Wednesday (7/10) show the biggest drop of Indonesian Foreign Exchange Reserve fell US$ 3.6 Billion in September 2015 to US$ 101.7 Billion (30/9) closing on psychological level threshold of US$ 100 Billion. The Foreign Reserve has fallen 12 percent over the last seven months from US$ 114.25 Billion in January 2015 to its lowest level US$ 101.7 Billion(30th September 2015 ). Unfortunately, data show that Rupiah drops most significantly 4.1 percent in September 2015 (, 3.7% in August 2015) despite of BI intervention, just like pouring salt in the ocean; annihilated reason that this rupiah rebound caused by intervention of BI. “Save by the Bell” said some analyst usually during critical moment of a boxing match. Then, Rupiah was rebound starting October 5th , 2015 by 5.6% increased after President Jokowi speech during the TNI Anniversary.
Was the correlation between Rupiah rebound and HUT TNI just a coincidence? Could it be asymmetric war of positive sentiment for Rupiah in Social Media against previously Investor pessimism in Rupiah strength or speculator (invisible hand) ? 

Even external Global factor such as Fed Reserved rumor of increased interest rate was said to cause reversal and panic of US dollar capital outflow from Indonesian market (or Taper Tantrum effect), which causing the weakening of rupiah and had little to do with recent steep strengthening of Rupiah except weak US domestic employment data. Furthermore, starting 5th October, Out of 11 main Global Currencies; 8 currencies even show weakening and only 3 show mild increased such as Korean Won (1.2%); Japanese Yen (0.2%) and Thailand Bath (0.4%); but rupiah was the champion showing a very steep inflection point of 4.4%, next to Malaysian ringgit 3.4%.
Now remain the domestic factors at national level that could cause such positive sentiment that drove the unbelievable rebound of Rupiah 8.78 percent last week from Rp 14,719 on Friday (2nd October) to Rp 13,521 Friday(10th October). The Rupiah surged 3.1 percent high on Wednesday as the biggest single day’s gain since December 2008 provided domestic market optimism

On 5th of October there are two significant phenomena, first is the third Government economic stimulus package and the second was 70th TNI Anniversary (HUT TNI) parade. Analyzing the previous two economic stimulus packages that show very little effect on strengthening rupiah, on the other hand the second phenomena, 70th HUT TNI parade should be the only key factor that could strengthening of Rupiah with such magnitude as the Jokowi effect. The troops march parade was followed by unique attraction of Modern Integrated Warfare involving hundreds of fighter jets (F16 & Sukhoi); helicopters; Hercules military transport plane; 52 battle ships and submarine and hundreds of Army Tanks and artillery weaponry in an artillery life combat form, seldom displayed at any Global military parade. Discussion between Rudi Rusdiah, chairman of Computer Association, Apkomindo, Alumnus of Lemhannas PPRA XLII/2008 and member of Cyberdesk (DK2ICN) , MenkoPolhukam with foreign diplomats, ambassadors, military attaché and observers that were present in the 70th HUT TNI celebration revealed positive impressions and report brought back to their corresponding countries that the economic and geopolitics in Indonesia was very conducive and stable. Although, in 2015 many unfavorable phenomena happening such as the worst El Nino since 1998 and global commodity crisis that brought Rupiah down to its lowest level since 1998 Asian crisis. This 70th HUT TNI triggered positive sentiments that were tweets and send through many Social media such as Twitter, Facebook, Youtube creating positive signals in the monitoring command center and global cyberspace originating from Indah Kiat port, Cilegon. An anomaly that has often forgotten by many economic analyst on the power of social media and Netizen Indonesia (80 Millions) and Global (2 Billions).

Thousands of civilian, villagers were present and participated enthusiastically in the marching parade showing the close relationship between TNI (military) and civil society; not to mention when President Jokowi approached the crowd of thousands spectators creating positive sentiment. It trigger another ’ Jokowi effect’ and positive signals that Indonesia are politically safe, stable and the need of strong Military to vanguard largest archipelago nation with 7,9 million km square of sea, large domestic market and country with rich in natural resources potential, strengthening the value of rupiah due to increase flow of investment to Indonesia. Military Chief, Army General Gatot Nurmantyo referred as “Pesta Rakyat” (People’s party), Strong and Professional TNI together with the People defending Indonesian sovereignty and independent with Minimum Essential Force (MEF) policy. Even Global Firepower military analyst positioned Indonesia in the 12th Global Rank below US, Russia, China, India, UK, Korea, and Israel; above regional forces Singapore, Malaysia and even Australia. The day after His Majesty Sultan Brunei Darussalam granted the honorific ‘Dato Paduka Seri’ highest recognition on General TNI Gatot Nurmantyo, the Chief of Indonesian National Armed Forces. 

Hoping that Indonesian Government could maintain last week inflection point of strengthening rupiah until end of this year, where the needs of US currency still high for the following years, a strong TNI and never underestimate the power of positive net-citizen sentiments in Social Media driving back investor confidence during the Big Data era. Rudi Rusdiah –rrusdiah@yahoo.com

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