Revised DHE Rules and BI Incentives Take Effect Today; Inflation Stirs Concern
Indonesia’s financial markets are expected to close in positive territory today. The Composite Stock Price Index (IHSG) managed to reverse course and close Monday’s trading (31/8/2026) in the green, posting a modest gain amid persistently high market volatility and portfolio adjustments by investors ahead of the effective MSCI rebalancing.
Based on trading data, the IHSG closed up 7.36 points, or 0.11%, at 6,525.48. During the session, the index briefly fell to 6,476.18 before rebounding to touch a high of 6,528.10.
The IHSG’s gain was primarily supported by large-capitalisation stocks, particularly in the financial sector. PT Bank Rakyat Indonesia (BBRI) was the largest contributor, adding 9.32 points to the index.
Other stocks that supported the IHSG included PT Alamtri Resources Indonesia Tbk (ADRO) with 3.24 points, PT Merdeka Gold Resources Tbk (BRMS) with 2.97 points, PT Bank Negara Indonesia (Persero) Tbk (BBNI) with 2.81 points, and PT Adaro Andalan Indonesia Tbk (AADI) with 2.20 points.
By sector, gains were led by the industrial sector, which rose 0.50%, followed by non-primary consumer goods at 0.42% and primary consumer goods at 0.22%.
However, several sectors remained under pressure. The healthcare sector suffered the deepest correction at 2.35%, followed by utilities at 0.88%, technology at 0.67%, energy at 0.27%, and property at 0.20%.
Among the stocks weighing on the index, PT Bayan Resources Tbk (BYAN) was the largest drag with a negative contribution of 8.67 points. It was followed by PT Amman Mineral Internasional Tbk (AMMN) at 3.59 points, PT Sejahteraraya Anugrahjaya Tbk (SRAJ) at 3.52 points, and PT DCI Indonesia Tbk (DCII) at 3.41 points.
Trading activity was also brisk. Total transaction volume reached 51.3 billion shares, with a transaction value of Rp25 trillion and a trading frequency of 2.39 million times.
A total of 392 stocks advanced, while 233 declined and 166 remained unchanged.
The rupiah began the week under renewed pressure against the US dollar. However, the weakening of the Garuda currency began to ease towards the close.
During trading, the rupiah was pressured to Rp17,755/US$. However, towards the close, the rupiah managed to trim its losses by 45 points.
Nevertheless, the closing position was still 25 points weaker than Friday’s trading (28/8/2026), when the rupiah stood at Rp17,685/US$.
In the bond market, the yield on 10-year government bonds (SBN) rose to 6.99% on Monday, from 6.96% the previous Friday. Rising yields indicate that SBN prices are falling as investors sell.
US stock markets closed lower on Monday, or early Tuesday morning Indonesian time. The markets fell after the US and Iran engaged in direct exchanges of fire for the first time in a month. Despite this, all three major Wall Street indices still recorded gains for August.
The S&P 500 fell 0.33% to 7,686.14. The Nasdaq Composite weakened 0.12% to 26,370.89. Meanwhile, the Dow Jones Industrial Average corrected 374.09 points, or 0.7%, to 53,185.90.
The Dow was pressured by declines in Goldman Sachs and Alphabet shares.
Tensions escalated again after the US Central Command (CENTCOM) confirmed that the US military on Sunday struck two rocket launchers on Larak Island, Iran.
The strike was the first publicly confirmed US attack on Iranian positions since late July. Iranian state media also reported that Tehran attacked a US military base in Jordan in retaliation.
Oil Prices Surge
The resumption of US-Iran military action immediately shook energy markets. Crude oil prices jumped more than 2% on Monday.
West Texas Intermediate (WTI) crude closed up 2.83% at US$85.76 per barrel. Meanwhile, Brent crude strengthened 2.71% to US$90.49 per barrel.
The rise in oil prices also pushed up long-term US Treasury yields, adding pressure to the stock market.
Tom Hainlin, National Investment Strategist at U.S. Bank Asset Management, assessed that current oil price levels are already relatively high, but not yet sufficient to deal a major blow to the US economy.
“The world economy still has enough oil for its needs, and prices of US$80-US$90 are not restrictive enough to cause the economy to collapse,” he told CNBC International.
According to him, current oil prices are only at the upper bound of that range and have not yet altered the outlook for consumer spending, business activity, artificial intelligence (AI), manufacturing returning to the US, or the electrification of the economy.
However, the situation could change if oil prices breach US$100 per barrel. According to Hainlin, that level begins to have the potential to become a significant burden on the economy.
Wall Street Still Posts Gains in August
Despite end-of-month trading being coloured by turmoil due to rising Middle East tensions, Wall Street still managed to post broad gains throughout August, with the technology sector as the main driver.
The Dow Jones rose more than 1% during August. This marked its fifth consecutive monthly gain and its 15th positive month in the last 16.
Meanwhile, the S&P 500 surged 2.6% and the Nasdaq Composite soared 3.9% during August. Both recorded their first monthly gains since May.
The S&P 500 and Dow Jones even briefly hit all-time record highs in August.
Thus, despite the US-Iran escalation once again posing a threat to markets, Wall Street managed to close August with a positive report card.
Indonesia’s financial markets today will be overshadowed by a number of important data announcements, ranging from inflation and manufacturing to the trade balance.
From abroad, the re-escalation of the Iran-US conflict and the fall on Wall Street could be negative sentiment.
The following are several market sentiments today:
- War Developments: Trump Threatens to Strike Iran Again, Conflict Heats Up Again
US President Donald Trump threatened to strike Iran again after the two countries engaged in direct exchanges of fire for the first time in about a month.
Iran launched missiles at two US bases in Jordan in retaliation for the US strike on Larak Island. Washington said the strike targeted Iranian launchers suspected of preparing to lay mines in the Strait of Hormuz.
“We will hit them hard. There will be a response,” Trump said, as quoted by Reuters.
However, Trump said the latest strikes did not yet mean the war had returned to full scale. He even said Iran had been “completely defeated militarily”.
In addition to military strikes, Washington continues to pressure Tehran through secondary sanctions against countries and companies that buy Iranian oil.
US Treasury Secretary Scott Bessent said Iran began launching attacks because economic pressure from sanctions was becoming increasingly severe. The US even plans to announce new sanctions every week, with the banking sector as the initial target.
Meanwhile, Iranian President Masoud Pezeshkian stressed that Tehran still wants a resolution through negotiation.
The latest escalation poses a threat to the Strait of Hormuz, a route through which about one-fifth of the world’s crude oil and gas trade normally passes. Disruption in this region has the potential to push global energy prices higher again.
Following the escalation, oil prices again touched the US$90 per barrel level.
- US Treasury Yields Surge Again
The yield on 10-year US Treasury notes rose again on Monday (31/8/2026), recording gains for the fourth consecutive session. This rise in yields is bad news for Indonesia because it could trigger an increase in SBN yields, thereby increasing the government’s debt burden.
The 10-year Treasury yield rose to 4.76%, its highest level since January 2025. The increase came after oil prices jumped following the renewed outbreak of clashes between the US and Iran for the first time in about a month.
The surge in oil prices triggered fresh concerns about US inflation, while also prompting market participants to increase bets on the possibility that the Federal Reserve will raise interest rates in September.
These expectations strengthened further after Fed Chair Kevin Warsh made statements at the Jackson Hole symposium last Friday.
Warsh said the Fed still “has work to do” if policymakers have not yet gained confidence that inflation is moving towards the 2% target.
Warsh has consistently emphasised the importance of bringing inflation down. However, the Fed held interest rates steady at its June and July meetings, so the timing of the next policy change remains a question mark.
Currently, the market estimates a probability of around 64% that the Fed will raise interest rates by 25 basis points in September.
If realised, a rate hike would tighten financial conditions and potentially add pressure to risky assets, including equities.
On the other hand, the combination of rising Treasury yields and oil prices is something the market needs to watch, as it could reinforce inflationary pressures while limiting the Fed’s room to loosen monetary policy.
- Indonesia Manufacturing PMI
Indonesia’s August manufacturing PMI data will be released today, Tuesday (1/9/2026). The Purchasing Managers’ Index (PMI) data shows Indonesia’s PMI stood at 50.2 in July 2026. This figure represents an improvement after the PMI recorded a contraction in June 2026 (46.9).
Investors and businesses are awaiting this data to gauge the capability of Indonesia’s processing industry heading into the fourth quarter of 2026.
Consensus estimates the index will rise slightly to 50.5, from 50.2 in July. If it remains above the 50 level, Indonesia’s manufacturing sector is still in expansion territory.
In July 2026, production activity increased again for the first time since February, amid stabilising new orders and improving customer confidence.
The rise in the PMI was supported by increased production volumes after four consecutive months of decline.
Although growth remains limited, businesses reported an improvement in demand and rising customer confidence.
However, the surge in raw material prices remains an obstacle to a stronger recovery. In line with this, new orders remained stable after experiencing a sharp contraction in June 2026.
- Indonesia Inflation and Trade Balance
Statistics Indonesia (BPS) will announce two important data sets today, Tuesday (1/9/2026): August 2026 inflation and the July 2026 trade balance. This data is important for measuring which food and non-food commodities have experienced price surges and their impact on Indonesia.
Indonesia’s Consumer Price Index (CPI) is expected to rise, or experience inflation, in August 2026. The CPI increase is primarily driven by rising prices of several food commodities, gold, and education costs.
However, declines in airfares and non-subsidised fuel prices are expected to restrain inflationary pressure.
The market consensus compiled by CNBC Indonesia from 13 institutions estimates that the CPI on a month-to-month basis will rise, or experience inflation of 0.17%.
Meanwhile, the CPI on a year-on-year basis is estimated to rise, or experience inflation of 3.11%.
For reference, in the previous inflation release for the July 2026 period, deflation of 0.14% was recorded on a monthly basis, while annual inflation stood at 2.88%.
Thus, the CPI is expected to reverse course and rise on a monthly basis after declining in July. Annual inflation is also projected to increase by 0.25 percentage points compared to the previous month.
The Office of Chief Economist team at Bank Mandiri estimates that the rise in inflation is primarily driven by a reversal in volatile food prices. This group is expected to rise again after falling quite sharply in July.
The increase mainly occurred in the prices of chicken meat and bird’s eye chillies. Food price pressures also risk persisting due to production disruptions triggered by El Niño and the dry season.
“Food price pressures may continue amid production disruptions due to El Niño and the dry season, although declines in garlic and shallot prices provide some offset,” wrote the Bank Mandiri Office of Chief Economist team.
BPS will also release July 2026 trade balance data. For reference, Indonesia’s trade balance recorded a deficit of US$450 million in June 2026.
This was due to export value of US$25.46 billion, while imports were recorded at US$25.91 billion.
The public is now waiting to see whether Indonesia will record a deficit for three consecutive months in July 2026 or be able to reverse course into a surplus.
- New Mining DHE Rules Take Effect 1 September
The government has begun implementing relaxed rules on foreign exchange proceeds from natural resource exports (DHE SDA) in the mining sector on 1 September 2026. This policy has been socialised to domestic and foreign business actors.
The relaxation of the rules also agreed on 15 foreign exchange banks as placement accounts for DHE SDA special accounts.
The 15 banks consist of five state-owned banks, or Himbara, namely Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI), Bank Tabungan Negara (BTN), and Bank Syariah Indonesia (BSI).
The remaining 10 are non-state-owned banks such as Standard Chartered Bank, Deutsche Bank AG, MUFG Bank Ltd., JP Morgan Chase Bank N.A., Citibank N.A., Bank of China, PT Bank ICBC Indonesia, PT Bank China Construction Bank Indonesia Tbk, PT Bank SMBC Indonesia Tbk, and PT Bank HSBC Indonesia.
The crucial Article 18A is one of the highlighted provisions.
Article 18A of Government Regulation 21/2026 regulates special provisions for the implementation of bilateral agreements on trade or other trade-related understandings/agreements.
For DHE SDA originating from the mining sector, these provisions include: the obligation to place at least 30% for a minimum period of 3 months from placement in the DHE SDA Special Account; placement may be made at banks conducting business in foreign currency; and conversion to Rupiah may be made at banks conducting business in foreign currency.
The decision to implement Article 18A was established through a Ministerial-Level Coordination Meeting on 23 July 2026.
The government has designated five countries that meet the criteria of Article 18A: the United States, China, Hong Kong, Australia, and Canada.
These five countries are the countries with the largest investment value in Indonesia’s mining sector, while also having bilateral agreements on trade or other trade-related understandings/agreements with Indonesia as required by Article 18A.
The use of the five largest countries of origin for investment in the mining sector as the basis for selection is intended to ensure that the Article 18A facility is precisely targeted at the investment sources that contribute most to national mining activities.
The following are the main points of the new rules:
Mandatory placement of 30% for a minimum of 3 months for mining exporters utilising the Article 18A facility.
Funds may be placed at state-owned or non-state-owned foreign exchange banks designated by the government.
This facility is optional for qualifying exporters.
If not utilising the facility, exporters continue to follow the old rules, namely 100% placement for a minimum of 12 months for non-oil and gas mining.
The Article 18A facility applies to mining companies in the form of limited liability companies (PT) with shareholders from partner countries, with a minimum ownership of 10%.
The government has designated 5 partner countries: the United States, China, Hong Kong, Australia, and Canada.
Of the 537 identified companies, 64 exporters, or about 12%, meet the criteria for the facility.
A total of 15 foreign exchange banks have been designated as DHE placement banks, consisting of 5 state-owned banks and 10 private banks.
The policy takes effect from 1 September 2026.