Jakarta's benchmark JCI index tumbled 2.3% and the rupiah weakened to 15,800 per dollar as markets reacted to President Prabowo's export restrictions on coal and nickel, fueling concerns over slowing export growth, capital outflows, and potential Bank Indonesia rate hikes.
Jakarta's benchmark index fell 2.3% as investors sold off mining and energy stocks on fears that export restrictions would slash revenue. The restrictions directly hit companies like Adaro Energy and Merdeka Copper Gold.
The JCI declined 2.3% in the session following the news, with mining stocks leading losses.
Mining and energy sectors bore the brunt, with shares of major coal and nickel exporters dropping sharply.
Some analysts consider the sell-off overdone, but caution that further policy tightening could prolong underperformance.
The Indonesian rupiah slid to 15,800 per dollar, a three-week low, as markets priced in reduced dollar inflows from exports. The move raised intervention risks from Bank Indonesia.
The rupiah fell to 15,800 per dollar, losing 1.2% on the day.
Markets now assign a 60% probability to a rate hike at the next meeting to stem currency weakness.
Analysts see the 15,800–16,000 range as critical; a break above 16,000 could accelerate the move higher.
Indonesian President Prabowo imposed new export restrictions on coal and nickel, aiming to boost domestic processing. The move sparked a sell-off in Jakarta stocks, with the JCI dropping 2.3% on fears of lost export revenue. The rupiah slid to 15,800 per dollar as markets priced in reduced dollar inflows. Analysts warn that the controls risk growth and inflation, raising odds of a rate hike from Bank Indonesia.
The government imposed new restrictions on coal and nickel exports, requiring a larger share of production to be processed domestically before shipment.
The controls threaten export revenue for major commodity producers, risk capital outflows, and may slow economic growth, prompting a sell-off in equities and currency.
For now, spillover is limited to Indonesia, but if prolonged, it could raise risk premiums across Southeast Asian markets, particularly commodity-dependent economies.