The Indonesian market suffered a sharp decline, with the rupiah surpassing 18,000 per dollar, and stocks falling to their lowest level in six years amid concerns about the economic outlook, fiscal stability, and policy uncertainty.
June 4, 2569 at 10.23:XNUMX a.m. Bloomberg News reported that Indonesian financial markets faced heavy selling pressure on Thursday (June 4). The rupiah weakened, breaking below the key psychological level of 18,000 rupiah per US dollar, while stock markets fell to their lowest levels in nearly six years amid investor concerns about economic policy uncertainty and increasing macroeconomic pressures.
The rupiah depreciated by up to 0.5%, bringing its year-to-date decline to around 8%. The Jakarta Composite Index (JCI) also fell by 5%, making both the Indonesian stock market and currency the worst-performing assets in Asia this year.
Investors are becoming increasingly concerned about Indonesia's economic outlook and fiscal position. High oil prices have increased the government's fiscal burden, while concerns about government intervention in the commodity sector, credit rating risks, and an upcoming MSCI review of the Indonesian stock market later this month are all factors causing investors to hesitate in their investments.
Felix Dharmawan, an analyst from BCA Sekuritas. said This sell-off was primarily driven by the rupiah's record low depreciation, coupled with pressure from a weakening trade balance, particularly increased oil imports.
Furthermore, investors are becoming increasingly concerned about policy risks, including the government's large-scale free food program and the possibility of the country's credit rating being pressured, which is impacting overall market confidence.
Earlier on Wednesday, Indonesian stock markets fell to their lowest level in five years, while the rupiah weakened to a new record low, despite the absence of new negative factors. This reflects the extremely fragile state of investor confidence and their readiness to reduce risk immediately, even without further negative news.
These concerns are reflected in the rupiah's continued weakening throughout the year, leading the market to closely watch whether Bank Indonesia will intervene more in the market.
Analysts from BNP Paribas, MUFG Bank, and PT Mega Capital Sekuritas. expected Indonesia's central bank may intensify its financial market management and could raise its policy interest rate as early as this month.
Parisha Symbi, strategist from BNP Paribas. said The 18,000 rupiah per dollar level is a psychologically significant level that investors highly value, and central banks are likely to try to slow the rate of currency depreciation.
Analysts warn that if the rupiah weakens further below 18,000, it could accelerate the outflow of foreign capital from Indonesia's stock and bond markets.
Since the beginning of the year, foreign investors have been net sellers of Indonesian stocks totaling over US$3.3 billion and bonds totaling approximately US$653 million.
Wee Koon Chong, Asia Pacific Market Strategist at BNY. said Until greater clarity is provided on domestic issues such as commodity export control policies and the outcome of the MSCI status review, Indonesian assets continue to face negative pressure.
In the past, the Indonesian central bank has implemented several measures to support the currency and attract capital inflows, including issuing rupiah-denominated bonds and tightening its dollar purchase restrictions.
Last month, the central bank also surprised the markets by raising interest rates by 0.50% and is scheduled to announce the results of its next monetary policy meeting on June 18.
However, continued currency intervention comes at a high cost, with Indonesia's foreign exchange reserves falling in April to their lowest level in nearly two years.
side Fitch Ratings Warning that If international reserves decline significantly to the point where they affect the country's ability to withstand external risks, it could lead to a downgrade in the country's credit rating or outlook in the future.
refer : www.bloomberg.com
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