TEMPO.CO, Jakarta - Bank Permata Chief Economist Josua Pardede has shared his insights on how to save rupiah and the Jakarta Composite Index (JCI/IHSG) from weakening further, emphasizing that the government must urgently restore market confidence. He noted that the current pressure stems not just from global volatility, but also from domestic vulnerabilities.
"Investors do not only consider exchange rates and stock indices, but they evaluate policy quality, fiscal certainty, Bank Indonesia’s independence, the direction of state spending, the governance of new institutions, and the quality of the capital market," Josua told Tempo on Thursday, June 4, 2026.
He explained that when there are concerns about fiscal discipline and unpredictable policy directions, investors naturally demand higher risk compensation. Consequently, this triggers pressure on the rupiah, spikes bond yields, and depresses equity valuations.
Another factor dragging down the JCI is a trust issue regarding the quality of the capital market. According to Josua, when global index providers drop several Indonesian equities or curb positive actions on domestic stocks, the resulting sell-off does not just hit those specific shares, but it also dampens sentiment across the broader market.
Josua also pointed out that while foreign exchange interventions can temporarily soothe short-term market turbulence, such measures remain a band-aid solution if the root issue of market trust is left unaddressed.
"For policymakers, the priority must be restoring trust. In a climate like this, what's most costly is not the weakening of the rupiah or the JCI itself, but rather the loss of investor faith in the country's policy trajectory," he warned.
Responding to the downturn of the JCI and the rupiah, Finance Minister Purbaya Yudhi Sadewa countered that Indonesia’s macroeconomic fundamentals remain in good condition. He also gave assurances that the country's fiscal position is secure.
Purbaya stated that this fiscal resilience is reflected in tax revenues, which saw a sharp uptick in May 2026. "In May, tax revenue growth hit 22.1 percent, much higher than the previous year's figures. That is something to be optimistic about," he told reporters at the Parliament building on Thursday, June 4, 2026.
Read: Palace Dismisses Talks of Purbaya's Exit from Red and White Cabinet
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