The Tamesis
The rupiah fell to a new low against the dollar on Tuesday after President Prabowo Subianto said he would nominate his nephew for a senior central bank job.
The move heightened concerns about government intervention in monetary policy and the country’s financial health, causing the yuan to fall 0.3% against the dollar to 16,985.
The rupiah has fallen nearly 2% this month after falling 3.5% in 2025, but has recovered after the country’s finance minister pledged to maintain the independence of Indonesia’s central bank.
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Finance Minister Purbhaya Yudi Sadeva Purbhaya sought to allay market concerns, saying the country’s economic fundamentals were sound.
“We will maintain the independence of the central bank and the government as much as possible. I will not squeeze the central bank to fund our development plans,” he said.
A presidential spokesman revealed on Monday that Prabowo’s nephew Thomas Djiwandono is one of three candidates who have submitted to parliament the nomination to head the central bank.
Purbaja said Givandono would resign from Gerindra, the president’s party, and would not be able to influence all central bank board members.
Analysts said the rupee may underperform compared to other Asian currencies as investors look for a higher risk premium.
“Concerns ahead of appointment were investors questioning [school] “The impact of the lunch plan and the highlights in Indonesia – low fiscal debt and the hard rule of 3% of GDP fiscal deficit,” Trinh Nguyen, senior Asia emerging markets economist at Natixis Corporate and Investment Banking, told Reuters.
“Now, with the appointment of his nephew, Bank Indonesia will be under pressure to ease monetary conditions,” Nguyen added. “But with the rupee weak, we don’t expect the central bank to cut rates.”
Former military general Prabowo’s 8% economic growth target (currently around 5%) and his actions in September have spooked investors. Replaces highly regarded finance minister Sri Mulyani Indrawati.
Foreign investors sold about $6.4 billion in government bonds in 2025, while the country’s budget deficit was 2.92%, the highest in 20 years. There are now fears that the country’s budget deficit ceiling may also be raised.
- Jim Pollard, Reuters.
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