Indonesia ’s rupiah rallied from a historic low this week, its stock market surged and a closely watched sovereign wealth fund bond offering was oversubscribed, offering Southeast Asia’s largest economy a reprieve after months of asset pressure.
But economists have warned that the relief may come at a cost as the same forces helping stabilise the rupiah, including higher interest rates and easing external pressure, could deepen financial strain on the country’s shrinking middle class and weigh on growth.
The rupiah was trading at 17,762 to the US dollar as of Wednesday, a rebound from its historic low of 18,000 the previous week. The Indonesia Composite Index also rallied by as much as 5 per cent on Monday after market turbulence had wiped more than 32 per cent off the stock market’s value over the previous six months.
Analysts attributed the rupiah’s recovery to Bank Indonesia’s decisive monetary response. The central bank has enacted back-to-back rate increases totalling 75 basis points in recent weeks, pushing its benchmark lending rate to 5.5 per cent – marginally above the US Federal Reserve’s current 3.5–3.75 per cent range.
The Bank Indonesia logo is seen outside the central bank’s headquarters in Jakarta. Photo: Shutterstock
“This was a fairly swift and highly unusual move compared to previous BI policies,” said Mohammad Faisal, executive director of the Centre of Reform on Economics Indonesia think tank.
Read the full article at South China Morning Post →📄Source document: Indonesian Central Bank (BI)→2 reports
South China Morning PostParty-alignedCenter3 days agoA sharp decline in Indonesian assets has sparked online discussions, with some social media users suggesting that Singapore might benefit from the 'Sell Indonesia' narrative. The rupiah has reached record lows, and Jakarta's stock market has lost significant value. In response, Indonesian social media users have adopted the '#SellSingapore' hashtag, accusing Singapore of profiting from negative sentiments toward Indonesia. This backlash has been noted by political figures, including Jansen Sitindaon of Indonesia's Democratic Party.
Bias read (Center): The article presents both perspectives—some social media users promoting the 'Sell Indonesia' narrative and others countering with '#SellSingapore'—without taking a stance or showing clear bias toward either side. It reports on economic conditions and public reactions neutrally.
South China Morning PostParty-alignedCenter4 days ago Indonesia’s rupiah rebounds but rate rises threaten middle classIndonesia's rupiah has rebounded from a historic low, with the currency trading at 17,762 to the US dollar as of Wednesday. The country's stock market also saw a surge, with the Indonesia Composite Index rising by up to 5% following significant declines earlier in the year. Analysts attribute the recovery to Bank Indonesia's aggressive monetary policy, including a series of interest rate hikes totaling 75 basis points, which pushed the central bank's benchmark lending rate to 5.5%. However, economists warn that these measures, while stabilizing the currency, may increase financial pressure on
Bias read (Center): The article presents economic developments in Indonesia without overtly favoring any political stance. It reports on currency fluctuations, stock market performance, and monetary policy decisions in a neutral tone, citing analysts and economic indicators without apparent ideological framing.
Official sources cited
- government Bank Indonesia's monetary policy actions
- organisation Mohammad Faisal, Centre of Refo
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