JAKARTA — Rully Arya Wisnubroto, Head of Research and Chief Economist at PT Mirae Asset Sekuritas Indonesia, emphasizes that the stability of the rupiah exchange rate remains the primary factor for luring foreign investors back to the Indonesian stock market. He notes that the current rally in the Jakarta Composite Index (JCI) largely mirrors global sentiment rather than a fundamental shift in the domestic economy.
“As long as the rupiah experiences high volatility, global investors will remain cautious about increasing their exposure to rupiah-denominated assets. Currency stabilization is a vital prerequisite for a more sustainable reversal in foreign capital flows,” Rully stated in an official release on Wednesday (6/5/2026).
Despite this caution, recent macroeconomic data has outperformed expectations, with Indonesia’s economy growing by 5.61 percent year-on-year (yoy) in the first quarter of 2026. However, Rully warned against premature optimism regarding market trends, citing persistent foreign capital outflows and a lack of powerful catalysts to shift market direction.
Providing further analysis, Novani Karina Saputri, a Research Analyst at Mirae Asset Sekuritas Indonesia, attributed the Q1 2026 growth to robust government spending and strong household consumption driven by the Ramadan and Lebaran holiday periods.
“The 5.61 percent growth was fueled by a significant 21.8 percent year-on-year surge in government spending, alongside solid domestic consumption. The government’s fiscal frontloading strategy provided a crucial boost to early-year economic activity,” Novani explained. She also noted that on a quarterly basis, the economy contracted by approximately 0.8 percent (qtq), highlighting the influence of seasonal factors.
Looking ahead, Novani expects economic growth to normalize in the coming quarters as the temporary effects of the holiday season and fiscal frontloading subside. She also pointed to emerging external pressures, including slowing exports, rising imports, and a contraction in the mining sector caused by weaker global commodity prices.
Regarding monetary policy, Novani anticipates that Bank Indonesia (BI) will maintain its benchmark interest rate at 4.75 percent throughout 2026, supported by relatively controlled inflation and resilient growth. Nevertheless, she cautioned that risks persist; should pressure on the rupiah intensify or oil prices remain elevated, a move toward a tighter monetary policy could become necessary.
“Market participants will be closely monitoring key indicators, including the results of the MSCI Market Accessibility Review in June 2026 and the consistency of the central bank’s rupiah stabilization measures,” she added.
As of 14:35 WIB on Wednesday (6/5), the JCI climbed 30.45 points, or 0.43 percent, to reach 7,087.55, while the rupiah traded at 17,415 per US dollar. Despite this upward movement in the index, foreign investors continued to divest, recording a net sell of Rp 518.39 billion across the market during the previous day’s trading on Tuesday (5/5).
Summary
Rully Arya Wisnubroto, Chief Economist at Mirae Asset Sekuritas, asserts that rupiah stability is essential for attracting foreign investment to the Indonesian stock market. Despite a recent rally in the Jakarta Composite Index, persistent currency volatility has led foreign investors to remain cautious and continue divesting from rupiah-denominated assets.
While Indonesia’s economy grew by 5.61 percent in the first quarter of 2026 due to strong government spending and domestic consumption, analysts warn that this growth may normalize in coming quarters. Market participants remain focused on Bank Indonesia’s monetary policy and the effectiveness of efforts to stabilize the exchange rate against external economic pressures.