Will the IDX-Rupiah Recover? Eight Major Storms Looming Ahead
Trading on Wednesday marked the final session of last week before the long weekend. The Indonesian financial markets are expected to remain volatile today, Monday (1-8/5/2026).
The Jakarta Composite Index (IHSG) closed significantly lower in Wednesday’s trading after the market reacted negatively to the MSCI index review, which removed several large Indonesian companies from its global indices. According to Indonesia Stock Exchange (IDX) data, the IHSG dropped 135.58 points, or 1.98%, to the 6,723.32 level. A total of 416 stocks declined, 239 gained, and 163 remained stagnant. Transaction value reached Rp19.79 trillion, with a trading volume of 38.95 billion shares across 2.3 million transactions.
Most trading sectors weakened, with the deepest corrections seen in infrastructure, basic materials, technology, and energy, while only the industrial sector managed to gain. The primary pressure on the IHSG stemmed from stocks removed from the MSCI Global Standard Index and the MSCI Global Small Cap Index. Key contributors to the decline included PT Chandra Asri Pacific Tbk. (TPIA), PT Barito Renewables Energy Tbk. (BREN), PT Dian Swastatika Sentosa Tbk. (DSSA), PT Amman Mineral Internasional Tbk. (AMMN), and PT Petrindo Jaya Kreasi Tbk. (CUAN).
In the currency market, the Rupiah managed to return to a strengthening position against the US Dollar at Wednesday’s close, attempting to move away from the psychological level of Rp17,500/US$. This reversal broke a three-day depreciation trend, occurring despite a strong US Dollar driven by rising US inflation and increasing US Treasury yields. US CPI for April 2026 rose 3.8% annually, the highest since May 2023, influenced by surging oil prices due to the conflict with Iran. Geopolitical uncertainty in the Middle East remains high, complicating expectations for potential Fed rate cuts.
The Rupiah’s strength is also expected to be supported by anticipated government policy interventions to stabilise domestic markets. Finance Minister Purbaya Yudhi Sadewa stated that the Ministry of Finance will assist Bank Indonesia in controlling Rupiah pressure against the US Dollar, utilising schemes such as the Bond Stabilisation Fund (BSF) to mitigate pressure on Government Securities (SBN).
In the bond market, the 10-year SBN yield weakened by 0.42% to 6.709% in Wednesday’s trading, indicating rising bond prices as investors entered the secondary market. Meanwhile, US markets closed lower on Friday (15/5/2026), with Wall Street pressured by tech sector sell-offs, rising US yields, and investor disappointment following the meeting between US President Donald Trump and Chinese President Xi Jinping, which failed to yield a major breakthrough.