Indonesian Stocks Gain Despite Rupiah, Global Monetary Policy Concerns

Indonesian Stocks Gain Despite Rupiah, Global Monetary Policy Concerns

Jakarta. Indonesian stocks opened 0.33% higher at 6,297 on Tuesday, as investors awaited Bank Indonesia’s (BI) latest interest rate decision amid concerns over the rupiah’s stability and global monetary policy.

Jakarta Composite Index (JCI) moved in positive territory in early trading, ranging between 6,297 and 6,313.

RTI data shows 641.53 million shares had changed hands in the opening minutes, with a transaction value of Rp 247.34 billion ($13.87 million) and a trading frequency of 50,793 transactions. A total of 293 stocks advanced, 125 declined, and 230 remained unchanged.

Phintraco Sekuritas projected the JCI would test the 6,186-6,200 range, as investors awaited the outcome of BI’s Board of Governors Meeting (RDG), scheduled for Tuesday.

The brokerage expected BI to keep its benchmark interest rate, or BI Rate, unchanged at 5.75%.

The Federal Reserve previously raised its benchmark interest rate by 25 basis points to 4%, narrowing the spread between the BI Rate and the Federal Funds Rate (FFR) to 1.75 percentage points from 2 percentage points.

Despite the narrowing, Phintraco Sekuritas said the spread remained wider than the average of 0.75-1.25 percentage points recorded over the past three years. The wider differential this year was intended to maintain an attractive interest rate differential for foreign investors while strengthening rupiah stability, the brokerage said.

Phintraco Sekuritas expected BI to consider another rate hike if the rupiah continued to weaken or the Fed resumed its tightening cycle.

However, BI was also expected to continue supporting economic growth, limiting the likelihood of aggressive monetary tightening. Further rate increases could be considered if the rupiah depreciated rapidly or inflation rose above BI’s target.

“Inflationary pressures are also expected to ease again as global oil prices correct. This could give BI room to avoid being too aggressive with its interest rate policy,” Phintraco Sekuritas said.

Beyond the rate decision, investors were also awaiting August 2026 credit growth data, which was projected to accelerate to 15% year-on-year.

Kiwoom Sekuritas Indonesia said global market sentiment was mixed as investors continued to monitor the Federal Reserve’s policy direction, geopolitical developments in the Middle East and oil price movements.

Statements from Fed officials highlighted concerns over persistent inflationary pressures, keeping investors focused on the outlook for US monetary policy.

Meanwhile, Pluang’s research team said long-term gold prices were driven more by expectations of fiscal deficits than by interest rate levels themselves, with monetary policy serving as a transmission channel rather than the primary driver.

International Monetary Fund (IMF) data showed that the US fiscal deficit was projected to remain above 7% in the coming years, while the global debt-to-GDP ratio had climbed from 82.1% in 2019 to 95.3% this year. The US debt-to-GDP ratio was projected to reach 142% by 2031.

Pluang also pointed to the US Treasury Department’s decision to triple buybacks of long-term bonds to curb yields, describing the move as a bullish signal for gold. The brokerage said the approach would require the government to refinance through short-term debt, which is more vulnerable to market volatility.

“We maintain our gold price target of $5,200 over the next 12 months, viewing the Fed’s hawkish pressure today as a short-term consolidation within a long-term structural trend that remains intact,” Pluang said.

In regional trading, South Korea’s Kospi gained 0.10%, while Hong Kong’s Hang Seng Index fell 0.87%. Shanghai’s SSE Composite Index slipped 0.24%.

Tags: Keywords: