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Critical Week: BI Announces Interest Rates, Government Leaks 2026 Targets

The Indonesian financial market ended in the green zone in last week's trading where the Composite Stock Price Index (IHSG) and the rupiah both strengthened. The Indonesian financial market is expected to be volatile this week due to the large amount of economic data that will be released. 

More about this week's market sentiment can be read on page 3 of this article. 

The Composite Stock Price Index (IHSG) recorded a brilliant performance last week. 

The HSG closed up on Friday (16/5/2025) by 0.94% at 7,106. Meanwhile, on a weekly basis, the IHSG shot up 4.01%. 

The IHSG shot up as the trade war tensions between China and the US eased. This condition has made investors start to feel calm and return to flowing their funds to Emerging Markets, such as Indonesia. 

In one week, foreigners recorded a net buy of IDR 1.38 trillion. This inflow is inversely proportional to previous weeks which still recorded net sell or outflow. 

The stock transaction volume last week reached 148.7 billion shares with a value of IDR 74.4 trillion. 

From the financial market, the rupiah exchange rate was seen to appreciate against the United States (US) dollar along with the easing of trade war tensions 

Referring to Refinitiv, the rupiah exchange rate against the US dollar on Friday (16/5/2025) closed at IDR 16,435/US$ or strengthened by 0.45%. 

On a weekly basis, the rupiah was seen to strengthen by 0.46%. This is different from the previous week which was corrected by 0.49%. 

The rupiah currency jumped on Friday, with the Indonesian rupiah leading the strengthening against the weakening dollar as disappointing US economic indicators strengthened expectations of a Federal Reserve interest rate cut this year. 

The easing trade war tensions also supported the rupiah. 

"The rupiah is trying to catch up with the recovery of other Asian currencies, after a long period of underperformance, also driven by improving sentiment in the domestic stock market," Radhika Rao, senior economist at DBS Bank, told CNBC Indonesia. 

With inflation still within the target range, policymakers have room to strengthen their pro-growth stance with a rate cut this month, Rao said. 

Last week the exchange rate market started with optimism after the US-China trade truce, which initially pushed the dollar higher, but that momentum quickly faded, causing most currencies to trade sideways. 

Meanwhile, the yield on 10-year Government Securities (SBN) fell sharply on Friday last week to 6.86% from 6.91% previously. 

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Tag: BI China IHSG