Practitioner States Investor Confidence is Key to Strengthening the Rupiah
Jakarta: Investor confidence is considered the primary factor in driving the strengthening of the rupiah exchange rate amidst global economic pressures. The government is also being urged to maintain policy consistency and strengthen fiscal credibility to ensure capital flows return and support financial market stability.
This was stated by tax practitioner and Head of Tax Researcher and Advisory at Inatax Consulting, Adhitya Gema Pratama, during the TAXCUSSION 2026 discussion themed “Indonesia’s Fiscal Resilience: Testing Policy Response Under Global Economic Pressure,” organised by the Research and Literature Division of the Fiscal Administrative Science Study Group, Faculty of Administrative Sciences, University of Indonesia (KOSTAF FIA UI) in Jakarta on Saturday (11/7/2026).
Adhitya stated that the main issue facing the Indonesian economy currently is not merely the weakening of the rupiah exchange rate, but the decline in investor trust. According to him, this condition is reflected in the continued pressure on the rupiah, which is hovering around Rp18,000 per US dollar, and high financial market volatility. Bank Indonesia’s Jakarta Interbank Spot Dollar Rate (JISDOR) on 29 July 2026 was recorded at Rp18,087 per US dollar.
He explained that stock market movements serve as a leading indicator, whereas economic growth or Gross Domestic Product (GDP) serves as a lagging indicator. Therefore, weakness reflected in GDP data describes the economic condition from some time ago, while financial markets reflect the expectations of businesses and investors regarding future conditions.
Adhitya also highlighted the movement of Indonesia’s Credit Default Swap (CDS) as one of the indicators used by investors to measure a country’s risk level. In his view, CDS developments show that market participants are still closely monitoring Indonesia’s fiscal prospects and the direction of the government’s economic policies.
He assessed that domestic factors are currently more dominant than external factors in influencing market sentiment. Amid global uncertainty, investors require certainty regarding policy direction to have the confidence to invest their capital in Indonesia.
“The most important thing is how the government can restore investor confidence. If trust returns, capital flows will return, and the rupiah will become stronger,” he said.
Adhitya added that policy consistency is the aspect most closely watched by investors. He noted that frequent policy changes or unclear government communication can trigger uncertainty and encourage investors to choose to place their funds in other countries.
He also assessed that the high sensitivity of the market to various statements from public officials demonstrates the importance of maintaining the credibility of government communication. Every policy signal conveyed by the government can affect investor perception of Indonesia’s economic prospects.
On the business side, Adhitya stated that the pressure of the weakening rupiah is most felt by companies with a high dependency on imported raw materials or foreign currency obligations. This condition makes business actors more cautious in making investment and business expansion decisions.
Furthermore, economic slowdowns also have the potential to affect tax compliance. He noted that when the ability to pay of business actors decreases, taxes tend to be viewed as a burden, leading companies to be more selective in managing their cash flows.
Therefore, Adhitya believes that efforts to maintain investor confidence are not only important for the stability of the rupiah exchange rate but also to support economic activity, investment, and ultimately safeguard state revenue from the taxation sector.