Rancak Media – Indonesia’s Finance Minister, Purbaya Yudhi Sadewa, observed on Monday, May 18, that the current movement of the Composite Stock Price Index (IHSG) remains influenced by short-term sentiment, though he firmly asserted the enduring strength of Indonesia’s economic foundation.
“There is no cause for excessive concern; we will address this as needed. The fundamental economic conditions are robust. This is merely a matter of fleeting sentiment. Therefore, my primary focus will be on preserving our economic foundation by ensuring that economic development proceeds uninterrupted,” Purbaya stated at Halim Perdanakesuma Air Force Base in Jakarta on Monday, May 18.
It is understood that the IHSG on the Indonesia Stock Exchange (IDX) opened weaker in Monday’s trading session, driven by investor anxieties regarding a potential era of high interest rates. These fears were exacerbated by the ongoing uncertainty surrounding the conflict between the United States and Iran, which has subsequently pushed crude oil prices upwards.
The IHSG registered a decline of 94.34 points, or 1.40 percent, settling at 6,628.98. Concurrently, the LQ45 Index, which comprises 45 blue-chip stocks, also saw a dip of 9.37 points, or 1.42 percent, reaching a position of 648.51.
The IHSG Once Again Opened Weaker Amid Concerns Over a High Interest Rate Era Triggered by Conflict
Purbaya further elaborated that the government is poised to intervene in the bond market, a strategic move aimed at upholding financial market stability and mitigating any potential outflow of foreign funds.
“We will be entering the bond market, starting today. Himbara (state-owned banks) have already participated, but on a limited scale. From today onwards, our intervention will be significantly more substantial,” he affirmed.
According to Purbaya, this proactive measure is designed to maintain control over the bond market and prevent foreign investors from divesting their bond holdings due to concerns about potential capital losses arising from declining bond prices.
“By ensuring the bond market remains stable, foreign investors holding these bonds will be less likely to withdraw, alleviating fears of capital loss should bond prices fall. This intervention can also provide some support for the rupiah’s movement,” he concluded, underscoring the broader positive impact on the national currency.
Summary
The Composite Stock Price Index (IHSG) recently declined by 1.40% to 6,628.98, driven by investor anxieties regarding high interest rates and global geopolitical tensions between the United States and Iran. Despite this market fluctuation, Finance Minister Purbaya Yudhi Sadewa emphasized that Indonesia’s economic fundamentals remain robust and that the drop is primarily a result of short-term sentiment.
To ensure financial stability, the government is initiating significant interventions in the bond market to prevent foreign fund outflows and mitigate potential capital losses. By stabilizing bond prices, officials aim to maintain investor confidence and provide necessary support to the national currency, the rupiah.
