President Prabowo Subianto reshuffled his cabinet yesterday, September 9, replacing five ministers, including Finance Minister Sri Mulyani Indrawati. Her position is now held by Purbaya Yudhi Sadewa, Chairman of the Indonesia Deposit Insurance Corporation (LPS). 

Other officials affected by the reshuffle were Minister of Youth and Sports Dito Ariotedjo, Minister of Cooperatives Budi Arie, and Minister for the Protection of Indonesian Migrant Workers (P2MI) Abdul Kadir Karding. Coordinating Minister for Political, Legal and Security Affairs also saw a change of leadership. 

The market reacted negatively to the news, with the rupiah opening weaker this morning, September 9, trading at Rp 16,499 per US dollar, down 189.6 points or 1.16% from the previous close, according to Bloomberg data. 

Analysts attributed the decline primarily to investor concerns over the dismissal of Sri Mulyani, a widely respected figure among domestic and international investors. Lukman Leong, analyst at Doo Financial Futures, projected the rupiah to move between Rp 16,350 and Rp 16,500 per dollar today. “The replacement of Finance Minister Sri Mulyani is being received negatively by the market,” he said. 

Fikri C. Permana, Senior Economist at KB Valbury Sekuritas, made a similar projection, estimating the rupiah at around Rp 16,330 per dollar. He noted that the market sell-off in both equities and government bonds yesterday intensified in the last 30 minutes of trading following confirmation of Sri Mulyani’s removal. 

Currency researcher Ibrahim Assuaibi also predicted rupiah weakness in the Rp 16,300–16,350 range. He emphasized, however, that the depreciation would likely be limited. “The president holds the prerogative to reshuffle his cabinet. The impact on the rupiah will not be severe, though the reaction is understandably negative,” Ibrahim said. 

This article is published in partnership with Katadata 

Original article here