RUPIAH\u2019S SLIDE FUELS INVESTOR CONCERNS<\/p>\n
While analysts stress that Indonesia\u2019s economy is far stronger than it was during the late 1990s crisis, the sharp decline has still unsettled investors and reignited concerns over inflation and policy direction.<\/p>\n
\u201cThe increasing oil prices are certainly unfavourable, and this leads to some concerns on the inflation front,\u201d said Roman Ziruk, a senior market analyst at fintech firm Ebury.<\/p>\n
\u201cWith regards to domestic factors, investors have worried about the fiscal situation, and central bank independence.\u201d<\/p>\n
Economists note that Indonesia\u2019s economic fundamentals today are considerably stronger than in the past.<\/p>\n
Banks are better capitalised, foreign reserves are healthier and economic growth remains above 5 per cent.<\/p>\n
But markets are increasingly questioning Indonesia\u2019s fiscal outlook, particularly as higher global oil prices threaten to raise fuel subsidy costs and place additional strain on government finances.<\/p>\n
\u201cThe deeper issue is that Indonesia\u2019s risk premium is being repriced,\u201d said Josua Pardede, chief economist at Permata Bank.<\/p>\n
\u201cInvestors are worried that higher oil prices will increase subsidy and compensation costs, weaken fiscal credibility, push bond yields higher, and limit Bank Indonesia\u2019s room to ease policy.\u201d<\/p>\n
Those worries are rippling across financial markets.<\/p>\n
Indonesian stocks have fallen sharply, while the rupiah\u2019s decline has prompted repeated intervention by the central bank to stabilise the currency.<\/p>\n
Investors are also scrutinising the government\u2019s broader economic direction, including concerns over policy credibility and the growing role of the state in business.<\/p>\n
In response, Indonesia\u2019s finance ministry recently urged Indonesians to bring offshore assets home within six months, even without offering a formal tax amnesty.<\/p>\n
Analysts believe the move could help improve domestic liquidity, though it may also heighten unease about capital flight.<\/p>\n
This measure alone \u201cis not enough to support confidence\u201d, said Charu Chanana, chief investment strategist at Saxo.<\/p>\n
\u201cOn one hand, it’s actually quite positive because it supports domestic liquidity, and potentially that could ease some pressure on the rupiah. It also sends a message that the government wants to strengthen compliance,\u201d she added.<\/p>\n
\u201cBut if markets see this as a sign that authorities are becoming worried about capital flight or dollar shortages, then sentiment could again be hit.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"RUPIAH\u2019S SLIDE FUELS INVESTOR CONCERNS While analysts stress that Indonesia\u2019s economy is far stronger than it was during…\n","protected":false},"author":2,"featured_media":454013,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,4404,184,85,7554,46],"class_list":["post-454012","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-currency","tag-economy","tag-il","tag-indonesian-rupiah","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/454012","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=454012"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/454012\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/454013"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=454012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=454012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=454012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}