Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomePMN BusinessIndonesia Market Rout Deepens as Bonds, Currency, Stocks SlideThe rout in Indonesian markets deepened on Monday with the nation’s bonds, stocks and currency tumbling.Author of the article:Last updated 5 hours ago You can save this article by registering for free here. Or sign-in if you have an account.0z[7tnwhk4hs2hhlqwm9[}3u_media_dl_1.png Bloomberg(Bloomberg) — The rout in Indonesian markets deepened on Monday with the nation’s bonds, stocks and currency tumbling.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe nation’s 10-year government bond yield jumped 33 basis points to the highest in more than a year. The benchmark stock index plunged 4% before paring losses, while the rupiah fell as much as 0.8% to a record low.Indonesia is facing growing calls to move beyond assurances and spell out more concrete measures to stem the selloff, with investors looking for stronger signals of policy discipline and market support. Mounting concerns over the government’s economic management, confusion over new commodity export rules and renewed scrutiny of Indonesia’s sovereign credit profile have hit investor sentiment. “The next two weeks are critical,” said Mohit Mirpuri, a partner at SGMC Capital Pte in Singapore. “The market is looking for clear signs of fiscal discipline, policy consistency and a strong commitment to macroeconomic stability.”Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againSentiment will likely remain bearish ahead of Bank Indonesia’s interest-rate decision and MSCI Inc.’s review of the country’s investability this month, analysts said. Speculation over a possible reshuffle of economic policymakers is adding to the unease, even after the finance ministry and central bank unveiled another measure over the weekend to support bond yields and attract inflows. Just five months after hitting a record high, the benchmark stock index has tumbled nearly 39% to become the worst performer this year among more than 90 global gauges tracked by Bloomberg. The rupiah has weakened about 8%, the worst performance in Asia this year, and breached the psychological level of 18,000 per dollar last week. Bank Indonesia Governor Perry Warjiyo and Finance Minister Purbaya Yudhi Sadewa held a joint briefing at the Parliament on Saturday, pledging to maintain sufficient liquidity in the market and work together to boost bond yields to lure more inflows. The central bank will also increase the interest rate on government cash placed with it, Warjiyo said.“The statement on Saturday can be a start to reduce market pressures, but it’s still not enough to sustainably turn the market direction,” said Josua Pardede, chief economist at PT Bank Permata in Jakarta. Authorities need to provide details on the remuneration rate, the scale of government deposits and the implications for BI’s costs and the government’s bond issuance, Pardede said. “Otherwise, markets could interpret it as a blurring line between fiscal and monetary policy, limiting any positive impact on the rupiah,” he said.Global investors are increasingly losing confidence in Prabowo’s more populist and interventionist agenda. They have pulled out a net $3.6 billion from local stocks this year, already exceeding equity outflows in 2020 during the pandemic. The Iran war has compounded the pressure as elevated oil prices increase Indonesia’s energy subsidy bill.For now, investors are watching whether policymakers can lift bond yields enough to attract inflows without adding strain to the state budget. Bank Indonesia will also need to raise rates more aggressively to lure funds back into rupiah assets, said Lionel Priyadi, a macro strategist at PT Mega Capital Sekuritas in Jakarta.“For the rupiah to strengthen back to below 18,000 levels, BI would need to hike interest rate by more than 50 basis points,” Priyadi added, expecting a 75-basis-point increase on June 18. The plan to pay higher remuneration on government deposits marks the latest sign of deeper coordination between monetary and fiscal authorities. By increasing returns on cash parked at the central bank, the measure could help offset some of the government’s rising debt costs.“If we increase the remuneration to the government, the government’s net interest burden will be better managed,” Warjiyo said. “This also simultaneously addresses the concerns of one of the ratings agencies regarding the government’s increasing interest payments.”Any increase in yields needs to be gradual to avoid unsettling domestic investors, said Aldo Perkasa, head of research at PT Trimegah Sekuritas Indonesia in Jakarta. Pardede said the government’s “optimistic narrative” needs to be backed by a more detailed policy response.“Pressures are beyond just exchange-rate volatility, but are related to risk perception toward Indonesia,” he said. “Investors are not only attracted by high returns, but also by their belief that Indonesia’s economic outlook remains credible.”—With assistance from Karl Lester M. 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