Brexit Boost

Financial markets around the globe are having the Brexit Blues. Britain's decision to break free from the European Union through a referendum on June 23 has wreaked havoc, evaporating trillions of dollars from investors' fund. But for Indonesia, Brexit's impact is not entirely negative. In fact, Indonesia's market has enjoyed a form of Brexit boost.

For one, it seems certain that Brexit will force the US Federal Reserve to reconsider its plans to raise its reference rate. As we know, if the Fed rate goes up, the rupiah will take a serious hit. So far, Brexit's direct impact on the rupiah has been weak. The not-so-steep-drop in the rupiah since Brexit is more due to a stronger US dollar.

July 5, 2016