Indonesian markets rebound ahead of Prabowo’s parliament speech
Published Wed, May 20, 2026 · 01:01 PM
[JAKARTA] Indonesia’s currency and stocks rebounded on Wednesday (May 20) in volatile trade, erasing earlier losses ahead of a key budget speech by President Prabowo Subianto.
The benchmark Jakarta Composite Index rose as much as 1.4 per cent, reversing a similar decline to outperform Asian peers. The rupiah also bounced off a record low to edge higher.
Markets were choppy ahead of Prabowo’s address at parliament, which will outline the 2027 budget framework and key programmes. A Bank Indonesia decision later in the day is also in focus, with analysts forecasting a possible interest-rate hike for the first time in two years.
The “potential positive fiscal headlines coming through is helping sentiment and driving the recovery”, said Felix Darmawan, an analyst at BCA Sekuritas.
Wednesday’s market swing comes after a sell-off in assets just a day earlier when speculation grew about the formation of a special agency to oversee strategic commodity exports, including coal, crude palm oil and minerals in a bid to support the currency. The plan had stoked fears of increased state control and weaker profitability in a key industry.
Bloomberg News later reported the entity would aim to manage exports and crack down on under-invoicing.
Indonesia’s markets have remained under pressure this year as fiscal discipline concerns compound risks of an MSCI market reclassification and a potential credit rating downgrade. The latest commodities export plan may bolster government finances amid deficit worries, but investors warned it could ultimately undermine decades of market-oriented reforms.
Down about 26 per cent this year, Indonesian shares have become the world’s worst-performing globally and its market has been overtaken by Singapore as South-east Asia’s largest. The rupiah has hit successive record lows since the start of the Iran war, a growing risk to authorities seeking to stabilise markets amid high oil prices.
Against that backdrop, the finance ministry has said that it started buying back government bonds since last Wednesday to anchor yields and restore credibility to the market. Yields on the 10-year bond gained two basis points to nearly 6.8 per cent. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
