Rupiah Stability Key to Attracting Foreign Investors to the Stock Market
REPUBLIKA.CO.ID, JAKARTA – Rully Arya Wisnubroto, Head of Research and Chief Economist at PT Mirae Asset Sekuritas Indonesia, stated that the stability of the rupiah exchange rate (kurs) is a key factor in attracting renewed interest from foreign investors to Indonesia’s stock market. Rully explained that the current strengthening of the Composite Stock Price Index (IHSG) is still in line with global sentiments and does not yet reflect significant fundamental changes.
“As long as rupiah volatility remains high, global investors will tend to remain cautious in increasing their exposure to rupiah-denominated assets. Exchange rate stabilisation will be an important prerequisite for seeing a more sustainable reversal in foreign fund flows,” said Rully in an official statement in Jakarta on Wednesday (6/5/2026).
Nevertheless, the latest macroeconomic data shows better performance than expected, including Indonesia’s economic growth of 5.61% year-on-year (yoy) in the first quarter of 2026.
“It is still too early to assume that this strengthening will continue, given that foreign fund flows are still recording outflows and there is no sufficiently strong new catalyst to change the market direction,” said Rully.
Novani Karina Saputri, Research Analyst at Mirae Asset Sekuritas Indonesia, explained that Indonesia’s economic growth in the first quarter of 2026 was strongly supported by government spending and household consumption during the Ramadan and Eid periods.
“The 5.61% growth (yoy) was supported by an acceleration in government spending that increased significantly to around 21.8% (yoy), as well as solid domestic consumption. The frontloading fiscal stimulus strategy also provided a boost to economic activity at the start of the year,” said Novani.
On the other hand, she continued, on a quarterly basis, the economy is still experiencing a contraction of around 0.8% quarter-to-quarter (qtq), indicating seasonal factors.
“We see growth potentially normalising in the following quarters as the effects of Ramadan and Eid subside, and the impact of fiscal frontloading diminishes,” said Novani.
From abroad, she said that pressures are starting to appear through slowing exports and stronger import growth, as well as contraction in the mining sector due to weakening global commodity prices.