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Or sign-in if you have an account.Perry Warjiyo Photographer: Dimas Ardian/Bloomberg Photo by Dimas Ardian /Bloomberg(Bloomberg) — Bank Indonesia Governor Perry Warjiyo suddenly resigned for unspecified “personal reasons,” unnerving investors who had viewed the central banker as a stabilizing force in an economy whipsawed by the policies of President Prabowo Subianto.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 AccountorIndonesia’s currency, stocks and bonds fell after State Secretary Prasetyo Hadi announced the resignation at a briefing in Jakarta on Monday. Senior Deputy Governor Destry Damayanti will take over as acting governor.Warjiyo didn’t attend the briefing, and didn’t immediately respond to a request for comment. He was in Singapore as recently as Friday to attend a gathering of regional central bank chiefs. Damayanti said Warjiyo submitted his resignation Saturday. 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 againAppointed by former President Joko Widodo in 2018 and serving his second five-year term, Warjiyo has been widely considered a steady hand amid the tumult of Prabowo’s presidency, with more than four decades of experience, including leading the central bank’s response to the pandemic.With the earlier resignation of Finance Minister Sri Mulyani Indrawati, Indonesia has now lost the two key personnel most well-known to investors and widely credited for helping turn around the nation from one of the so-called “Fragile Five” to one of the most promising emerging markets.Investors will be closely watching for any signs that the change leads to a less independent central bank, according to Gama Asset Management SA.“The key issue will be institutional rather than personal: whether the leadership transition leads to greater government pressure on Bank Indonesia to support its growth agenda,” said Rajeev De Mello, global macro portfolio manager at Gama.“Any perception that monetary policy is becoming less independent would risk adding to the pressure on the rupiah and Indonesian assets,” he said.Under the law, the president will nominate a replacement, who must be vetted and approved by parliament. Damayanti said that the remaining board of governors will ensure the continuity of BI’s duties, including maintaining a stable currency.The rupiah fell as much as 0.3% against the US dollar while the benchmark stock index lost as much as 0.8%. Yields on 10-year government bonds climbed four basis points.What Bloomberg Economics Says…“Well-regarded Bank Indonesia Governor Perry Warjiyo’s surprise resignation Monday adds to an expanding list of downside risks to Indonesian assets. The immediate concern is that the change in leadership at the central bank will lead to a less-responsible monetary policy.” – Tamara Mast Henderson, economistFor the full note, click hereBank Indonesia’s repeated market interventions and interest-rate hikes of 100 basis points since May have so far failed to arrest a decline in the rupiah, which is hovering near a record low and is the worst performing currency in Asia this year.“The news that Governor Perry Warjiyo has resigned will see Indonesian assets tread cautiously this week,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Corp. “Market focus will be on who the permanent replacement will be, and whether this indicates any shift in the way BI conducts policy.”Under Prabowo, elected in 2024, Bank Indonesia has come under pressure to align policy more closely with the government, including the president’s goal to lift annual growth to 8%, raising investor concerns over its independence. Prabowo also appointed his nephew as a deputy governor earlier this year, and parliament passed a law in June expanding the central bank’s objectives to include real sector growth and job creation, and subjecting it to performance evaluations.That law “has made the institutional firewall separating Bank Indonesia, the government, and Parliament considerably thinner,” said Liza Camelia Suryanata, head of research at PT Kiwoom Sekuritas Indonesia.Despite those challenges, Warjiyo, 67, had publicly supported Prabowo’s policies. Last year, for instance, he promised monetary policy would be “all-out, pro-growth” and often appeared next to Finance Minister Purbaya Yudhi Sadewa when announcing joint policy initiatives. Investors have also been rattled by Indonesia’s budget discipline and policy certainty under Prabowo, who has sought to increase the role of the state and concentrate economic power in the hands of its wealth fund Danantara, which he controls.The cost of insuring Indonesia’s dollar-denominated debt edged higher on Monday, according to traders, while credit default swaps on much of the rest of investment-grade Asian debt ex-Japan posted the biggest decline in a month as concerns over US-Iran tensions eased.Hadi, the state secretary who’s close to Prabowo, sought to deflect questions Monday from reporters about Warjiyo’s resignation. Asked about speculation there was political pressure behind the move, Hadi responded, “What speculation? That’s you saying speculation.” Hadi added that Prabowo will meet with Damayanti, possibly as soon as Monday.The US attack on Iran had also complicated Warjiyo’s job by driving up energy prices and leading investors to shy away from energy-importing emerging markets. The possibility of Federal Reserve rate hikes also threatens to spur more capital outflows.“With structural pressures on the rupiah yet to ease, we see few credible alternatives than for Bank Indonesia to maintain a tightening bias,” said Adam Ahmad Samdin of Oxford Economics. He predicts one more rate hike this quarter.Earlier on Monday, national newspaper Media Indonesia published a column by Fithra Faisal Hastiadi, a University of Indonesia economist who serves as a senior economic expert at the Government Communications Agency, arguing that Bank Indonesia’s independence should not mean keeping its distance from the government and should align monetary policy more closely with its growth agenda.Hastiadi pointed to central-bank models in India, China and Singapore, where monetary authorities operate more closely within national development strategies, while saying BI should retain professional control over interest rates, the currency, liquidity and macroprudential policy.GCA didn’t immediately respond to request for comment on the article. —With assistance from Norman Harsono, Adrian Kennedy, Bernadette Toh, Harry Suhartono and Karl Lester M. Yap.(Updates market reaction in fourth paragraph.) 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