Economic and Political Observer at Neptun Intelligence, Dian Agustina, believes that the continuous depreciation of the Rupiah against the US Dollar, reaching the Rp 18,000 level, is a market verdict on the credibility of Indonesian President Prabowo Subianto’s administration.
“The exchange rate is a barometer of political trust. The Rp 18,000 figure is not just a reflection of external pressures. It is a market verdict on the credibility of the Prabowo administration,” she told media on Friday, June 5, 2026.
Dian added that as the Rupiah continues to weaken rapidly against the US Dollar, the market is actually doubting the policy direction of President Prabowo’s government.
“This uncertainty manifests as a widening fiscal deficit due to populist programs like MBG, mixed signals regarding the independence of Bank Indonesia (BI), and corruption cases within the government’s inner circle,” Dian explained.
Dian emphasized that the perception of governance has further eroded following the naming of a former Deputy Minister of Imipas as a suspect, as well as the trio of leaders from the National Nutrition Agency (BGN).
“This, of course, continues to erode the perception of governance,” Dian clarified.
Government Playing Defensive, Not Offensive
Furthermore, Dian stated that the steps taken by Bank Indonesia and the government so far, such as market intervention, maintaining interest rates, and cabinet meetings at the Palace, are merely firefighting rather than fire prevention.
“From a political economy perspective, this shows that the government is reactive to market pressures, not at the forefront of addressing them,” Dian asserted.
Dian then elaborated on a series of structural problems. According to her, there are three intertwined issues: first, at the global level.
“The hawkish stance of the Fed, geopolitics in the Middle East driving safe haven demand, and foreign capital fleeing emerging markets. These are beyond the government’s control,” Dian said.
Next, Dian explained that at the domestic economic level, the issue is Indonesia’s export structure, which is still heavily reliant on raw commodities.
“When commodity prices are not strong enough to offset capital outflows, the Rupiah becomes the victim,” Dian elaborated.
Meanwhile, at the political level, Dian said that the expansion of state spending for short-term political agendas creates a perception of fiscal risk.
According to Dian, the market views the State Budget (APBN) not as an instrument of development, but as a tool for consolidating power.
“Just look at the MBG program; that’s an example of what is called power consolidation,” Dian revealed.
Implement Structural Reforms
Given these conditions, Dian urged the government to implement structural reforms. Dian called for legal certainty for investment, serious fiscal consolidation, and consistent policy communication.
“Foreign investors do not just read data; they read political will,” Dian explained.
Dian then viewed that the government’s current efforts are insufficient. This is because, she said, the problem is not technical capacity, but political commitment.
“Bank Indonesia has instruments. The Ministry of Finance has figures. What is lacking is the political courage to take unpopular steps: curbing spending, prioritizing credibility over image-building, and sending a firm signal that Indonesia is open for serious business, not just open for photo opportunities,” Dian concluded.
Source : kedaipena.com
