5 September 2025 (closed)
Jakarta Composite Index (7,867.35) -18.51 -0.23%
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After the drastic cabinet reshuffle on Monday 8 September 2025 - when Indonesian President Prabowo Subianto replaced five ministers and created one new ministry - it is interesting to take a look at how markets are responding to these developments after a night's rest.
On Tuesday (08 April 2025) the stock market reopened in Indonesia after the long Idul Fitri holiday. And so, it was the first time investors could respond to global turmoil that occured after US President Donald Trump announced steep import tariffs for goods shipped into the United States (feared to trigger a global trade war and global economic recession).
In March 2022 the US Federal Reserve started to tighten its monetary policy in an aggressive manner to combat high US inflation that –at one point– touched a 40-year high.
Before we give an update on the monetary policy of Indonesia’s central bank (Bank Indonesia), it is worth mentioning that Bank Indonesia Governor Perry Warjiyo was appointed for another five-year term (2023-2028) as the central bank’s chief.
The central bank of Indonesia (Bank Indonesia) raised its benchmark interest rate (BI 7-day reverse repo rate) by 25 basis points (bps) after concluding its two-day policy meeting on 18-19 January 2023. Indonesia’s benchmark rate now stands at 5.75 percent. It also raised its deposit facility and lending facility rates by 25 bps to 5.00 percent and 6.50 percent, respectively.
As expected, the central bank of Indonesia (henceforth: Bank Indonesia) decided to raise its benchmark interest rate (the 7-Day Reverse Repo Rate) by 25 basis points (bps) to 5.50 percent after concluding its latest (two-day) monetary policy meeting on 21-22 December 2022. Meanwhile, it also decided to raise the deposit facility and lending facility rates by 25 bps to 4.75 percent and 6.25 percent, respectively.
For the first time since early November 2020 – which is around five months ago – the Indonesian rupiah depreciated beyond the IDR 14,500 per US dollar level. It is a threshold that makes Indonesians a bit concerned.
The Indonesian rupiah had a good start of the month in November 2020. Based on Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (Jisdor), the rupiah appreciated 3.4 percent against the US dollar in the first two trading weeks of November 2020.
The Indonesian rupiah rate, which had been under extreme pressure amid the start of the novel coronavirus (COVID-19) crisis in March 2020, rebounded in April 2020 and continued this rebound throughout May 2020 (albeit at a less impressive pace).
While the Indonesian rupiah rate had retreated against the US dollar in November 2019 amid an increase in uncertainty in international markets, the Indonesian currency managed to end the year 2019 on a positive note.
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Usually, news about inflation is not well-received by market participants. Particularly when inflation turns out to be higher than expected. This time, however, something interesting happened in Indonesia. Although the country's March inflation rate was high (5.90 percent year-on-year), it was not followed up by a negative response of market players. In fact, the inflation rate seems to have strengthened the Indonesia Stock Exchange (IHSG), which gained 0.40 percent on Tuesday.
Although the Indonesia Stock Exchange (IHSG) was moving in the red zone for a while during today's trading day, in the end it recorded a small gain. Most other Asian stock indices, except for Hong Kong's Hang Seng and Shanghai, went up as well. High expectations about continued IHSG-growth, strong corporate results of companies, and continued robust foreign demand for Indonesian stocks pushed the index up.
Recent concerns about a global currency war, which is considered to threaten worldwide economic and financial stability, has prompted Indonesia's Economic minister Hatta Rajasa to ensure that Indonesia will not participate in such a tactic. The Central Bank of Indonesia (Bank Indonesia) has in fact been selling US dollars to support the IDR rupiah, which has been under growing pressure lately due to Indonesia's current account deficit and the risk of capital outflows.
Rising Asian stock markets, particularly a strong Hang Seng (Hong Kong) that opened today after the Chinese new year celebrations, had a positive impact on the Indonesia Stock Exchange (IHSG). As had happened in previous years, the IHSG has the tendency to gain ahead of Valentine's day. Today, market participants received their special Valentine's gift: a new record-high IHSG level of 4601.95, although in the end it had to close a bit lower.
After rallying for three days to try to end on a new resistance level, the Indonesia Stock Exchange (IHSG) finally had to retreat. As we suspected, the index weakened after its record high. Moreover, American and European indices were weak on Thursday, thus influencing the performance of the IHSG on Friday. Lastly, a number of Asian companies reported weak corporate reports that subsequently impacted on Asian stock indices, including the IHSG.
