IHSG slips amid wait-and-see market on BI rate direction
Jakarta (ANTARA) – The Jakarta Composite Index (IHSG) of the Indonesian Stock Exchange (BEI) on Tuesday moved lower as market participants adopted a wait-and-see stance on the direction of Bank Indonesia’s (BI) benchmark interest rate policy. The IHSG opened down 0.03 points, or 0.00 per cent, at 6,599.21. Meanwhile, the LQ45 index (the 45 leading stocks) fell 0.60 points, or 0.09 per cent, to 650.49.
“It is expected the IHSG will move within the 6,400–6,700 range,” said Ratna Lim, Head of Research at Phintraco Sekuritas, in a Jakarta briefing on Tuesday.
Domestically, pressure on the Rupiah exchange rate has prompted expectations that Bank Indonesia (BI) could raise the BI-Rate at Tuesday’s (18/05) and Wednesday’s (19/05) meetings.
BI Governor Perry Warjiyo predicts that the Rupiah against the US dollar will strengthen from July 2026, noting that historically the Rupiah tends to weaken from April to June due to higher demand for US dollars in those months.
If the BI-Rate is raised in order to curb further Rupiah depreciation, it would be aimed at increasing the attractiveness of domestic investments for foreign investors, with yields on domestic instruments expected to become more attractive.
However, higher interest rates could lift borrowing costs, potentially increasing corporate interest expenses and reducing household purchasing power.
Internationally, the United States and Iran are reported to have revised their proposals to end the conflict, but remain far apart in their positions. US President Donald Trump said he had postponed planned military strikes against Iran on Tuesday (19/05).
Concerns over prolonged energy turmoil could fuel inflation, potentially prompting central banks to raise rates. As such, government bond yields in several countries tend to rise.
In addition to pressing households and governments through higher borrowing costs, higher bond yields can also affect corporate profits in the future, potentially altering stock valuations.
Oil prices rose by more than 2 per cent, despite Trump delaying the attack on Iran. The U.S. 10-year bond yield rose by less than 1 basis point to 4.601 per cent, after previously hitting its highest level in 15 months. Spot gold rose 0.2 per cent to around $4,548 per troy ounce, as the US dollar weakened.
In Monday’s (18/05) trading, European stock markets broadly rose, with the Euro Stoxx 50 up 0.58%, the UK FTSE 100 up 1.26%, Germany’s DAX up 1.49%, and France’s CAC up 0.44%.
Meanwhile, the US stock market on Wall Street moved mixed on Monday (18/05), with the S&P 500 down 0.07% at 7,403.05, the Nasdaq down 0.45% at 28,994.37, and the Dow Jones up 0.32% at 49,686.12.
In early trade this morning, Asian stock markets included the Nikkei down 290.95 points or 0.48% at 60,524.00, the Shanghai Composite up 7.72 points or 0.19% at 4,167.89, the Hang Seng down 10.65 points or 0.26% at 4,120.88, and the Straits Times up 29.90 points or 0.60% at 5,026.65.