Indonesian President Prabowo Subianto removed Finance Minister Sri Mulyani Indrawati from her post, risking renewed financial turmoil for Southeast Asia’s biggest economy following days of violent protests against his administration.
Purbaya Yudhi Sadewa, who has served as chairman of the Deposit Insurance Corporation since 2020, was sworn in as the new finance minister by Prabowo late on Monday.
Rumours that Prabowo could replace Sri Mulyani led the benchmark stock index to pare early gains to close 1.3 per cent lower ahead of the announcement. While Sri Mulyani’s house was sacked during recent nationwide protests over perks for elites, she enjoys widespread respect among international investors.
“There’s definitely a risk of capital flight now as international investors will be spooked in terms of what the fiscal outlook now looks like,” said Michael Brown, senior research strategist at Pepperstone Research in London. “IDR NDFs are already trading pretty soft on the headline and you’d expect that to continue.”
The offshore rupiah one-month non-deliverable forward extended losses after Indrawati’s removal was confirmed, trading 0.7 per cent lower at 16,516 per dollar after being up as much as 0.6 per cent earlier. PT Bank Central Asia and PT Bank Mandiri Persero led stock declines.
Sri Mulyani has led Indonesia’s finance ministry for nearly 14 of the last 20 years, a symbol of fiscal credibility for three presidents, who is widely credited for helping the nation secure investment-grade credit ratings.