Flooring Guide by Cinvex — Finance Minister Purbaya Yudhi Sadewa has stated that the recent volatility in the Jakarta Composite Index (IHSG) is driven primarily by short-term market sentiment, emphasizing that Indonesia’s underlying economic foundations remain robust.
Addressing the situation at Halim Perdanakesuma Air Force Base on Monday (May 18), Purbaya reassured the public, stating, “It is manageable, and we will address it. The economic foundation is sound. The current market fluctuations are merely a result of short-term sentiment. My priority is to safeguard this foundation and ensure that the nation’s economic development remains undisturbed.”
The IHSG opened lower on Monday, reflecting growing investor anxiety over a prolonged period of high interest rates. This cautious outlook has been fueled by geopolitical tensions between the United States and Iran, which have triggered concerns about rising crude oil prices and global market instability. Consequently, the IHSG dipped by 94.34 points, or 1.40 percent, settling at 6,628.98. Similarly, the LQ45 index, which tracks 45 of the most liquid stocks, declined by 9.37 points, or 1.42 percent, to reach 648.51.
Market Outlook: IHSG Declines Amid Fears Over High Interest Rates and Geopolitical Conflict
To mitigate these pressures, the government is taking proactive measures to stabilize the financial sector and prevent significant foreign capital outflows. Purbaya announced that the government is prepared to intervene more aggressively in the bond market.
“We are entering the bond market starting today,” Purbaya noted. “While state-owned banks (Himbara) have already begun participating, their involvement has been minimal. We will now increase our presence significantly to stabilize the market.”
The strategic intervention is designed to keep bond prices under control and provide reassurance to foreign investors, preventing a sell-off driven by fears of capital losses due to falling bond valuations. Purbaya concluded that these steps are essential to maintain market stability and, in turn, provide a degree of support for the Indonesian Rupiah during this period of global uncertainty.
Summary
Finance Minister Purbaya Yudhi Sadewa has dismissed the recent decline in the Jakarta Composite Index (IHSG) as a result of temporary market sentiment, asserting that Indonesia’s economic fundamentals remain solid. The market dip, which saw the IHSG fall by 1.40 percent, was largely triggered by investor anxiety surrounding high interest rates and geopolitical tensions between the United States and Iran.
To counteract this instability and prevent significant capital outflows, the government is initiating aggressive interventions in the bond market. By increasing the presence of state-owned banks, officials aim to stabilize bond prices, reassure foreign investors, and support the Indonesian Rupiah amidst ongoing global economic uncertainty.