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🇮🇩 Indonesia /Economy & Trade

Investor Confidence Drops, Rupiah Continues to Weaken

From Republika · (9m ago) Indonesian Critical tone

Translated from Indonesian, summarized and contextualized by DistantNews.

TLDR

  • Indonesia's rupiah is facing pressure not only from monetary factors but also from broader structural economic issues, according to an INDEF researcher.
  • Investor confidence in Indonesia's economy is declining, leading to capital outflows and further weakening the rupiah.
  • Experts emphasize the need for coordinated cross-sectoral efforts, beyond market intervention, to signal concrete positive changes to investors.

The Indonesian rupiah continues to face significant downward pressure, a situation that researchers at the Center of Macroeconomics and Finance INDEF attribute to more than just monetary policy. Abdul Manap Pulungan, a researcher at INDEF, points to deeper structural problems within the Indonesian economy that are eroding investor confidence.

Masalah rupiah ini bukan hanya dari sisi moneter. Banyak hal, misalnya masalah fiskal yang berat, masalah ketahanan energi, yang pada akhirnya membuat investor menilai ini bukan waktu yang tepat untuk mengoleksi portofolio di dalam negeri Indonesia.

— Abdul Manap PulunganExplaining the reasons behind the rupiah's depreciation and declining investor confidence.

Pulungan stated that the current economic climate suggests a waning trust from investors regarding Indonesia's domestic economy. He highlighted that issues such as a heavy fiscal burden and challenges in energy security are making investors hesitant to allocate their portfolios to Indonesia. This sentiment is further exacerbated by a continuous outflow of foreign capital, as investors divest from domestic markets, intensifying the pressure on the rupiah.

Ini juga menjadi sinyal bagi pemerintah, persoalan tingkat kepercayaan investor global terhadap Indonesia sedang menurun, yang terlihat dari bagaimana investor melepas portofolio di dalam negeri yang menyebabkan rupiah semakin terpuruk.

— Abdul Manap PulunganHighlighting the declining global investor confidence as a signal to the government.

The situation serves as a stark warning to the government about the declining global investor confidence in Indonesia. The researcher noted that the financial sector's current state is also not conducive to attracting capital inflows. While previously capital flowed in from stocks, SRBI, and SBN, now only SBN remains relatively stable, with SRBI and stocks showing weakness and uncertainty.

Sekarang yang masih positif SBN, SRBI dan saham justru sedang melemah, jadi tidak menentu.

— Abdul Manap PulunganDescribing the current state of financial markets and capital inflow sources.

Beyond mere market interventions, Pulungan stressed the critical need for coordinated, cross-sectoral actions. He urged the central bank (BI), the Ministry of Finance, and the Financial System Stability Committee (KSSK) to provide not just rhetoric, but truly concrete positive signals to the market. This approach is vital to stabilize the rupiah and restore investor faith in Indonesia's economic resilience.

Salah satunya yang perlu dilakukan setelah intervensi di pasar memang bagaimana nanti BI, Kementerian Keuangan, atau KSSK itu bisa memberikan sinyal positif, tetapi positif yang benar-benar konkret, bukan hanya narasi.

— Abdul Manap PulunganEmphasizing the need for concrete positive signals from authorities beyond market intervention.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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