Sri Mulyani was included as a candidate for governor of Bank Indonesia. After getting some new whispers, Jokowi chose Perry Warjiyo again.

If Sri Mulyani really becomes a serious candidate for Bank Indonesia governor, the financial market will see a negative signal. The brakes that safeguard prudent financial policy might very well come loose.

The rupiah exchange rate is in danger of continuing to weaken because export dollars are parked abroad. Bank Indonesia issued a monetary operation instrument to strengthen the rupiah.

The PPSK Law was passed with relatively fast deliberations. This financial omnibus law unifies 17 laws, changing the gameplay of many financial services institutions and businesses.

The new financial regulation regime that drastically changes many aspects of Indonesian financial architecture is passed into law. There are many shortcomings that could threaten the financial system.

For Indonesia, the high interest on the US dollar will trigger an exodus of capital and put pressure on the rupiah. If the rupiah continues to weaken, imported consumer goods, as well as imported raw materials used in Indonesia’s industries will become more expensive.

The market now can only anticipate that tighter monetary policy will worsen the drought of dollar liquidity around the world. US dollar liquidity in Indonesia’s financial market will also be affected.

The best Bank Indonesia can do now is just to let the rupiah weaken in a slow and steady manner, a soft landing. That would be lucky enough for Indonesia to avoid a crash that could trigger a chaotic monetary crisis.

President Joko Widodo needs to immediately reduce fuel subsidies. Most of these subsidies do not reach their targets.

Our condition will be tough. After surviving the first semester of 2022 with good performance, Indonesia’s economy must anticipate inflationary shocks, interest rate hikes, and slowdowns. However, this is not the end of the world.

BANK Indonesia's action to hold interest rates triggered the flight of foreign capital. Domestic investors will find it difficult to absorb government bonds.

Holding interest rate when external conditions are volatile would neither maintain the stability of the rupiah nor hold inflation at bay.

Bank Indonesia now must weather an entirely different financial storm compared to the previous two months. Three negative factors are working in tandem: rising inflation, rising Fed rates, and a volatile financial market.

Forcing economic growth in such volatile conditions is a dangerous policy. It is akin to driving a bus through a hailstorm. As long as it does not slow down immediately, the bus is at risk of crashing anytime.

Amidst the optimism of recovery, there are several threats to the global economy. How about Indonesia?

The increase in the price of a number of commodities in global markets would increase domestic inflation. Data from the government lacks credibility.

The Indonesian government, corporations, and consumers must be ready to face a global inflation storm that is starting to happen and intensify.

The rise in the Fed’s interest rates will sooner or later creep into domestic interest rates. Bank Indonesia must rewrite its scenario.

This coming market tantrum is indeed different from the previous one. But, there is no certainty, how severe or how light its effect is.

The government is taking on policies that are very far removed from rational economic consideration. As a matter of fact, its decisions have a negative impact on growth. What are those?

High inflation occurs everywhere. Consumers are the bearers of the heaviest burden.

Inflation in the United States hits the highest record in the last 40 years. It is a big risk for Indonesia

Getting into 2022, the fight against inflation will be an important narrative that determines the movement of the global market.

The fear of tapering and higher interest rates after the Fed Chair Jay Powell's testimony to the Senate caused global stock prices to fall rapidly, including in Indonesia.

The tightening of the US dollar liquidity in the global market which is immediately followed up by a rise in interest rates will create a great shock to the market. Emerging economies like Indonesia will face high pressures.

There some good news about Indonesia’s economy because of the jump in various commodity prices in the global market. But their real effects are yet to come.

The key question is: would the additional ammunition from the IMF be enough to keep Indonesia’s financial market safe when the tapering shock arrives?

The resolution of the government to put the brakes on 2022’s budget deficit brings relief to the market.

Wholesalers are optimizing sales via online marketplaces as the retail industry gasps for air amid the emergency public activity restrictions. Meanwhile, small ones can only wait as their clocks tick.

Yopie Hidayat (Contributor)

Crypto assets become increasingly popular in Indonesia. In four months alone, from January to April, their transaction value reached Rp237 trillion, or a fourfold increase from throughout 2020. At least 5.6 million Indonesians now own various digital coins. Bappebti Chair, Indrasari Wisnu Wardana, explains his institution’s position regarding the new, largely unregulated market.

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat

(Contributor)

The lesson from Turkey is clear. Central bank’s independence is the anchor of market confidence. If Indonesia does not want to share the same fate as Turkey and lose its credibility, the government needs to immediately figure out, one way or another, how to reduce its budget deficit.

Inflation in the US, which might trigger an interest rate hike by the Fed and reduced liquidity injection, is becoming the biggest fear of emerging markets, including Indonesia. Investor’s money which has been anchored here might just return home, in great numbers and fast.

Bank Indonesia and the Financial Services Authority relax the provisions for motor vehicle ownership loans. Players in the financial industry are not bold as to boast their performance will immediately spur.