Indonesia Faces Economic Strain as Rupiah Hits Two-Week Low

Indonesia is experiencing significant economic challenges as the rupiah has fallen to a two-week low, prompting intervention from Bank Indonesia. The currency has dipped 0.7% to 16,530 against the dollar, making it the weakest in the region this year, as investor confidence wanes due to President Prabowo Subianto's expansive social spending plans and budget uncertainties. Foreign investors are increasingly pulling out, with a total sell-off of $3.85 billion in stocks since October, leading to a substantial decline in the Jakarta Composite Index. Analysts warn that any unexpected rate cuts by Bank Indonesia could exacerbate the rupiah’s weakness and further destabilize the markets. The situation is compounded by geopolitical factors and concerns about new military law revisions that may undermine Indonesia's business-friendly climate. As Indonesia navigates these financial headwinds, the focus is on the central bank's upcoming decisions to stabilize the economy without stifling growth.