Coordinating Minister for Economic Affairs Airlangga Hartarto has downplayed the recent weakening of the Indonesian Rupiah and the fall in the Jakarta Composite Index (JCI) following the inauguration of the new Finance Minister, Purbaya Yudhi Sadewa, characterizing the dips as short-term and driven by temporary market sentiment. “This is temporary,” Airlangga stated on Tuesday, September 9th, at the Presidential Palace in Jakarta.
Drawing a parallel to the market reaction following the launch of the Indonesian Investment Authority (INA) on February 24th, Hartarto, also the chairman of the Golkar Party (2017-2024), emphasized the resilience of Indonesia’s economic fundamentals. He expects a swift market recovery, echoing the rebound seen after the INA’s launch. “It’s similar to when Danantara was launched; it dipped briefly, then rose again,” he explained.
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Hartarto further reassured the public, stating that the government remains optimistic and unfazed by the ministerial change. This sentiment was echoed by the new Finance Minister himself.
In a separate statement, Finance Minister Purbaya Yudhi Sadewa outlined his plans to strengthen synergy with Bank Indonesia (BI) to ensure fiscal and monetary policies do not overburden the banking sector. Having already engaged with BI Senior Deputy Governor Destry Damayanti, Purbaya highlighted the importance of strategic collaboration. He stated, “With the president’s permission, we will take the necessary steps to significantly increase liquidity in the future.”
Purbaya pledged to avoid extreme fiscal policies, emphasizing a commitment to a more flexible financial system that supports economic growth and accelerates government programs. He firmly stated, “Clearly, we won’t adopt any unusual fiscal policies.”
The Jakarta Composite Index (JCI) closed down 138.24 points (1.78%) to 7,628 on Tuesday, September 9th. Concurrently, the Indonesian Rupiah weakened against the US dollar, opening at 16,495 per US dollar, a decline of 185 points (1.13%) from the previous day’s closing rate of 16,310.
Summary
Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, attributed the recent decline in the Indonesian Rupiah and Jakarta Composite Index (JCI) to temporary market sentiment following the appointment of a new Finance Minister. He cited similar market reactions in the past and predicted a quick recovery, emphasizing the strength of Indonesia’s economic fundamentals. The government remains optimistic about the economic outlook despite the ministerial change.
New Finance Minister Purbaya Yudhi Sadewa plans to enhance collaboration with Bank Indonesia to manage fiscal and monetary policies effectively, avoiding extreme measures. He aims to increase liquidity and foster a more flexible financial system to support economic growth and government initiatives. The JCI closed down 1.78% on September 9th, while the Rupiah weakened by 1.13% against the US dollar.