Video: Rupiah Depreciation Driven by More Than Just War Effects, Linked to Credibility

External pressures and domestic sentiments continue to weigh on the movement of the Jakarta Composite Index (IHSG), which plummeted by more than 4% to the 6,400 level during Monday’s trading. Simultaneously, the Rupiah touched an all-time low of Rp 17,660 per US Dollar.

Regarding domestic factors, the Director of International Collaboration at INDEF, Imaduddin Abdullah, stated that the impact of MSCI decisions on the perception of global investors in the Indonesian financial market has become very serious. Since January 2026, the IHSG has declined significantly following MSCI releases, which have eroded market confidence regarding the transparency of the Indonesian stock market. Consequently, a serious agenda for exchange transformation and reform is required, particularly concerning share transparency.

As for the Rupiah, Imaduddin noted that while the pressure is inseparable from the impact of the Middle East war and is exacerbated by Federal Reserve policies, the depreciation of the Rupiah is notably deeper compared to ASEAN neighbours such as Malaysia and Singapore. This suggests that the credibility of Indonesia’s fiscal and monetary policies is currently perceived as lagging behind.