REPUBLIKA.CO.ID, JAKARTA \u2013 Economist from Hasanuddin University, M\nSyarkawi Rauf, analysed the link between risk premium and the extreme\ndepreciation of the Rupiah throughout 2026. According to him, the\nRupiah\u2019s weakening is partly due to Indonesia\u2019s high risk premium. As\ninformation, risk premium is the additional return expected by investors\nas compensation for taking higher risks compared to investments\nconsidered safe.<\/p>\n
\u201cSince January 2026, Indonesia has experienced a phenomenon of\nincreasing risk perception, as reflected in the high country risk\npremium, which is around 2.46 percent. This is higher than Malaysia\u2019s\n1.55 percent and Thailand\u2019s 2.07 percent,\u201d said Syarkawi in a statement\nreceived by Republika, quoted on Friday (15\/5\/2026).<\/p>\n
Similarly, Indonesia\u2019s equity risk premium reached 6.69 percent since\nJanuary 2026. This figure is much higher than Malaysia\u2019s 5.78 percent\nand Thailand\u2019s 6.30 percent.<\/p>\n
\u201cHigh risk perception has caused the Rupiah exchange rate to weaken\nand even reach its weakest point in history,\u201d he said.<\/p>\n
The Rupiah has passed the IDR 17,500 per US dollar level on Tuesday\n(12\/5\/2026). It even touched IDR 17,600 per US dollar during trading on\nFriday (15\/5\/2026).<\/p>\n
Syarkawi said this contrasts with the movement of other ASEAN\ncurrencies, such as the Malaysian Ringgit and the Thai Baht, which have\nlower risk perceptions. The Malaysian Ringgit exchange rate against the\nUS dollar has tended to strengthen since January 2026 until now.<\/p>\n
The Thai Baht currency, with a lower country risk premium than\nIndonesia, has weakened by only about 1.07 percent compared to last\nmonth and 2.49 percent in the last 12 months.<\/p>\n
\u201cFurthermore, Indonesia\u2019s high equity risk premium has caused the\nJakarta Composite Index (JCI) to fall drastically from its all-time high\non January 19, 2026, of 9,147.5 to only 6,853.5 on May 12, 2026. Heading\ntowards its lowest point in the last five years of 6,272.0 on March 17,\n2025,\u201d he explained.<\/p>\n
This contrasts with the Malaysian stock price index (FKLCI), which\nhas a lower equity risk premium than Indonesia and has increased to\n1,751 points on Tuesday (12\/5\/2026). This figure increased by about 0.30\npercent compared to the previous trading session on Monday (11\/5\/2026),\nor increased by 10.36 percent compared to last year (year on\nyear\/yoy).<\/p>\n
Similarly, the Thai stock price index, SET 50, with a lower equity\nrisk premium than Indonesia, weakened to only 974 points on Tuesday\n(12\/5\/2026). This figure decreased by about 0.04 percent compared to the\nstock price index on Monday (11\/5\/2026). However, the index is 23.32\npercent higher than last year (yoy).<\/p>\n
According to Syarkawi\u2019s analysis, the high risk premium of the Rupiah\ncan also be seen in the anomaly of the Rupiah exchange rate depreciation\nagainst the US dollar in recent days. Especially since the release of\nthe Central Bureau of Statistics (BPS) regarding the national economic\nfundamentals, namely Indonesia\u2019s economic growth reaching 5.61 percent,\nthe highest since 2023.<\/p>\n
\u201cThis means that the extreme depreciation of the Rupiah against the\nUS dollar does not align with the movement of national macroeconomic\nfundamental indicators, especially the interest rate differential,\neconomic growth, and inflation between Indonesia and the US,\u201d he\nsaid.<\/p>\n
\u201cThe phenomenon of extreme depreciation of the Rupiah against the US\ndollar and the sharp decline in the JCI since January 2026 more reflects\nthe high risk premium of the national economy,\u201d he added.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-falls-to-idr-17-600-per-us-dollar-economist-highlights-this-issue-1780593360", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }