There is a painful irony that repeats in developing markets: when the\nexchange rate touches a new psychological level, when foreigners exit\nfor days on end, when media commentary is full of pessimism, that is\nprecisely the moment that is most profitable for investing. History of\nthree large developing economies proves this forcefully and\nconsistently.<\/p>\n
Let us begin with Indonesia in 1997\u20131998. The rupiah, which was\ninitially Rp4,850 to the US dollar, collapsed to Rp17,000, a\ndepreciation of 73 per cent in a matter of months. Sukarno? No, Suharto\nfell. Riots swept the country. The IMF arrived with strict conditions.\nThe narrative at the time was singular: Indonesia was crushed and\nbankrupt. Foreign capital fled, the IHSG plunged 68 per cent.<\/p>\n
Few wanted to hold rupiah-denominated assets. Yet those investors who\nentered at the depths of panic enjoyed a 168 per cent rise in the\nfollowing four years. Institutional reforms born from the crisis, namely\nan independent Bank Indonesia, fiscal decentralisation, and\nbanking-sector restructuring, became the foundation of two decades of\ngrowth.<\/p>\n
Two decades later, a similar story unfolded in Turkey. In the 47 days\nbetween July and August 2018, the lira lost 34 per cent of its value\nagainst the dollar. Fitch closed its Istanbul office. Moody\u2019s and\nS&P trimmed the rating. Foreign financial institutions cried \u201cTurkey\nis uninvestable.\u201d<\/p>\n
Various academic arguments subsequently uncovered findings that\ncontradicted intuition: it was institutional foreign investors who were\nwilling to buy during the crisis who delivered the highest returns in\nthe following months. Borsa Istanbul (BIST) in local currency grew 479\nper cent between 2010 and 2022, even outperforming almost all\ndeveloping-market indices worldwide, despite the lira remaining under\npressure.<\/p>\n
Brazil completes this triad. Between 2015 and 2016, the samba nation\nwas hit by triple shocks: two consecutive years of recession (GDP minus\n3.8 per cent and minus 3.6 per cent), impeachment of President Dilma\nRousseff over fiscal irregularities, and the Petrobras corruption\nscandal that unsettled market confidence.<\/p>\n
The Brazilian real weakened 33 per cent. Ibovespa in January 2016 was\nat roughly the same level as in 1997. Yet from that nadir Ibovespa\ntrebled in four years, a rise of around 200 per cent by January 2020,\nbefore the pandemic hit again.<\/p>\n
Structural Pattern<\/p>\n
There is a structural pattern common to these three cases. First,\ncurrency crises depress valuations to historical lows. Second, massive\nforeign outflows create liquidity that is dumped into the market at\ndiscounted prices. Third, local narrative pessimism reaches a peak.<\/p>\n
These three case studies prove that this is a sign that almost all\nbad news has already been priced in. Then policy responses arrive:\ncentral-bank rate hikes, fiscal interventions, or structural reforms\nthat become catalysts for a reversal.<\/p>\n
Of course not all emerging-market crises end in recovery. Argentina\nis the dark side example: repeated defaults, an uncredible central bank,\nand destructive capital controls produce a permanent crisis rather than\na buying opportunity. The difference lies in the fundamental\ninstitutions of that country.<\/p>\n
At least a few questions remain: Are central banks independent enough\nto take painful decisions? And can the structure of external debt still\nbe managed? And is the crisis external and cyclical, or structural and\nsystemic?<\/p>\n
What about Indonesia\u2019s condition?<\/p>\n
Here the relevance for Indonesia in 2026 becomes sharp. The rupiah\nhad briefly touched around Rp17,700 per dollar or hit a historic low.\nForeign outflows were aggressive. Local narrative deteriorated.<\/p>\n
If we look at the structural comparative patterns above, Bank\nIndonesia is still perceived as able to preserve its credibility and\nintegrity, even though doubts about governance exist in markets due to\nburden-sharing pressure. On 20 May 2026, Bank Indonesia raised the BI\nRate to 5.25 per cent, which this move signals as policy credibility and\nindependence.<\/p>\n
Indonesia also remains capable of managing its external-debt\nstructure well. The debt-to-GDP ratio in 2025 remained around 40 per\ncent, well below Malaysia and Thailand. The deficit target of the state\nbudget (APBN) remains below 3 per cent of GDP.<\/p>\n
Domestic economic problems are not structural and systemic; rather,\nthey are largely sentiment-driven, as the government maintains the\neconomy\u2019s fundamentals and external uncertainties, notably tensions in\nthe Middle East and US foreign policy.<\/p>\n
History never repeats exactly, but it rhymes. And the rhymes most\npersistent in emerging markets are not those of entering when everything\nis bright, but those of standing firm in uncertainty with calculation,\nnot blind courage when others are fleeing.<\/p>\n
If investors are more patient and have a sufficiently long investment\nhorizon, today\u2019s conditions \u2014 though full of uncertainty \u2014 still offer\nopportunities as good as those seen in 2008, 2013, or 2020.<\/p>\n
May the confidence of our stock-market participants \u2014 institutions\nand retail, foreign and domestic \u2014 quickly improve.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/has-the-worst-narrative-been-priced-in-1779542171", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }