Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, has moved to reassure the public that the recent depreciation of the rupiah and the dip in the Jakarta Composite Index (IHSG) following a cabinet reshuffle will be a transient market reaction. His comments aim to temper anxieties amidst significant shifts in the nation’s economic leadership, emphasizing that market volatility is temporary and Indonesia’s economic fundamentals remain robust.
The financial markets reacted sharply, with the IHSG closing in the red zone on Tuesday (September 9). The index registered a notable decline of 138.244 points, or 1.78 percent, settling at 7,628.604. This significant market movement occurred as the focus shifted to the official handover of the Finance Minister portfolio from Sri Mulyani to Purbaya Yudhi Sadewa. Simultaneously, the Indonesian rupiah also experienced a notable weakening, shedding 172 points (1.05 percent) to reach Rp 16,481 against the US dollar, according to Bloomberg data. While acknowledging the current market volatility, Airlangga did not provide a specific timeline for when these conditions are expected to normalize.
Despite the immediate downturn, Minister Airlangga emphasized the underlying strength of the Indonesian economy. “This is temporary,” he stated from the Presidential Palace complex on Tuesday (September 9). “We are observing the evolving situation, but we must also safeguard Indonesia’s robust fundamentals. Therefore, we will certainly reassess the trajectory moving forward.” This underscores his confidence in the nation’s economic resilience against short-term market fluctuations and the government’s commitment to stability.
Airlangga further dismissed any concerns surrounding the change in the Finance Minister, framing it as a standard exercise of presidential authority. He highlighted that the appointment of a new Finance Minister falls within President Prabowo Subianto’s prerogative. “I believe that is the President’s prerogative,” Airlangga asserted, adding, “It was also affirmed today that everyone is working for the nation, for the red and white flag. So, there is no cause for concern.” This statement seeks to unite stakeholders under a common national purpose, mitigating political uncertainties.
The Coordinating Minister reiterated his belief that the weakening of the rupiah and the drop in the IHSG are primarily driven by temporary sentiment rather than structural economic issues. He drew a parallel to a previous market event, recalling a similar dip when the Indonesia Investment Authority (BPI) Danantara Indonesia was launched. “Regarding sentiment issues, we are confident that with the government’s implemented policies, the market will reverse,” Airlangga explained. “This is much like when Danantara was launched; it experienced a brief decline before swiftly recovering.” This historical example reinforces his optimistic outlook for Indonesia’s financial markets, suggesting that current challenges will similarly pave the way for a recovery.
Summary
Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, has stated that the recent depreciation of the rupiah and the dip in the Jakarta Composite Index (IHSG) following a cabinet reshuffle are temporary market reactions. The IHSG dropped 1.78% to 7,628.604, while the rupiah weakened 1.05% to Rp 16,481 against the US dollar after the Finance Minister portfolio handover. Airlangga stressed the robust fundamentals of the Indonesian economy, reassuring the public despite the immediate market downturn.
Minister Airlangga attributed the market volatility to temporary sentiment, affirming that the change in Finance Minister is within President Prabowo Subianto’s prerogative. He expressed confidence that government policies would lead to a market reversal, drawing a parallel to a previous market dip that quickly recovered. This historical example reinforces his optimistic outlook for Indonesia’s financial markets, suggesting a similar recovery for current challenges.