What are the main drivers behind Indonesia's recent market turmoil and loss of investor confidence?

The main drivers are growing concerns over policy uncertainty, political intervention, and execution risks under President Prabowo Subianto’s administration — including the sacking of respected Finance Minister Sri Mulyani Indrawati, increasingly populist and interventionist policies, confusion over new commodity export rules, a widening corruption investigation involving Prabowo’s $15 billion free meals program, and legislative changes undermining central bank independence by granting parliament power to evaluate Bank Indonesia’s performance.

How severe is Indonesia's current financial market deterioration compared to other major economies?

Indonesia’s benchmark stock index has fallen more than 35% this year, making it the worst-performing major equity market tracked by Bloomberg; the rupiah has dropped roughly 14% since Prabowo took office and is Asia’s weakest currency in 2026; foreign investors have cut holdings of Indonesian sovereign bonds by about 86 trillion rupiah ($4.8 billion) since last August; and the rupiah recently breached the psychologically important 18,000-per-dollar level for the first time.

Indonesia Faces Crisis of Confidence as Markets Decode Prabowo

Jun 5, 2026

Investor confidence in Indonesia has plummeted due to policy uncertainty and new export regulations targeting key commodities like palm oil, coal, and ferro-nickel. The rupiah has dropped 14% and stocks fell 35%, causing shipment delays and debt repayment concerns among exporters.

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Indonesia Faces Crisis of Confidence as Markets Decode Prabowo

Indonesia Faces Crisis of Confidence as Markets Decode Prabowo

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