Indonesia’s central bank governor Perry Warjiyo steps down, stoking independence concerns
President Prabowo Subianto has accepted Warjiyo’s resignation, Minister of State Secretariat Prasetyo Hadi told reporters at an early morning press conference ahead of the opening of financial markets in Jakarta.
BI senior deputy governor Destry Damayanti was appointed as interim governor. Destry said Warjiyo resigned for personal reasons.
The rupiah weakened as much as 0.14% to 17,960 per dollar in early trading, while the main stock index lost as much as 0.68% before trading higher and was up 0.26% by 02:09 GMT.
“Perry Warjiyo’s resignation is likely to be received negatively by the market, given that they are a stable couple with a good track record,” said ASEAN expert Angus Mackintosh of Aletheia Capital in Singapore. “
With veteran lieutenant governor Destry stepping in initially, much will depend on who takes over. “If Prabowo’s nephew (Thomas Djiwandono) steps in as lieutenant governor, the market will be skeptical, given that this is a very important technocratic post and BI must remain independent.”
Prasetyo said Warjiyo submitted his resignation to the president through a letter, but Warjiyo refused to elaborate on his personal reasons. Warjiyo could not be reached for comment. Warjiyo was first appointed governor in 2018. He was reappointed for a second five-year term in 2023.
The rupiah fell to a historic low in June amid global market turmoil and concerns over Indonesia’s fiscal management and central bank independence, with BI under pressure to support Prabowo’s massive growth agenda. Indonesia’s parliament last month passed a sweeping law that doubles BI’s role in supporting growth and gives lawmakers the power to make binding recommendations for independent financial regulators and the central bank.
Destry told reporters after his resignation announcement that BI would “always ensure the continuity of its duties and powers” to maintain the stability of the rupee and the financial system to ensure an economic environment conducive to growth.
He said BI will continue to operate in accordance with best practices.
BI surprised markets last week by leaving policy rates unchanged, instead offering new incentives to attract foreign capital inflows aimed at supporting the rupiah. BI had raised interest rates by a total of 100 basis points since May to attract foreign inflows to support the rupiah.
“This development is expected to become a key focal point for financial markets as investors await the government’s decision on his successor and assess its implications for BI’s continuity of monetary policy, institutional credibility and overall policy direction,” brokerage Mirae Asset Sekuritas said in a note. he said.
Last year, the sudden sacking of Indonesia’s influential finance minister, Sri Mulyani Indrawati, shook markets; Investors feared the country’s financial credibility could be eroded by populist and costly spending plans under Prabowo.
