The implementation of referendum for Britain Exit (Brexit) on June 23, 2016 will lead to increased volatility in the global exchange transactions, including the Indonesia Stock Exchange (IDX). Brexit will potentially cause deeper rupiah depreciation so the investors will refrain in their transactions.
Taye Shim, Head of Research at Daewoo Securities Indonesia, said that the direct impact of Brexit to the Indonesian economy is not significant because Britain is not one of the 15 countries that have large trade deals with Indonesia. However, we are to watch its indirect impacts in the increase in the volatility trend seen in the VIX index at 18 points. This indicates that market participants expect an increase in risk. Bank of England last week also released a statement saying the uncertainty caused by the referendum Brexit is the biggest risk facing the global financial markets in the short term.
Stephanus Turangan, President Director of PT Trimegah Securities Tbk (TRIM), said Brexit will potentially cause the rupiah to weaken compared to its current position at Rp 13.260 per US dollar. “Like last year when the rupiah fell to Rp 14,000 per US dollar, the stock transaction activity declined because people refrained from trading,” said Stephanus. Nevertheless, Indonesian economic fundamentals are considered quite strong and better than last year so they will be able to face the turmoil caused by the negative sentiments toward Brexit. (*)
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