Indonesia’s weakening markets and economy have a personality problem – Prabowo’s
The mercurial President has spooked businesses and placed retired military men in charge of various companies.
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Indonesian President Prabowo Subianto needs to assure markets that entrepreneurs and experts, not his old-boy herd, will control the commanding heights of the country's economy, says the writer.
PHOTO: REUTERS
And so, Bank Indonesia has just announced an emergency rate increase of 25 basis points, a back-to-back hike that has left the benchmark rate at 5.5 per cent. The aggressive move is meant to signal further hawkishness to come if markets do not come to heel.
The central bank explained in a written statement that the off-cycle increase was prompted by a “more-than-expected” weakening of the rupiah, and a further step in stabilising the exchange rate amid the war in West Asia and heightened global turmoil. DBS Research says it expects another 50-basis-point increase between the second and third quarters to take the benchmark to 6 per cent.
