- The Indonesian Rupiah depreciated by approximately 10.4% against the US Dollar over the period January 2025 to June 2026, with the USD/IDR JISDOR rate reaching Rp17,899 per US Dollar by end-June 2026. This depreciation did not occur in isolation: it unfolded against a backdrop of global financial-market uncertainty, elevated domestic inflation, Indonesia’s first monthly trade deficit in six years, and a more defensive monetary-policy stance by Bank Indonesia, which raised its policy rate by a cumulative 75 basis points in the first half of 2026.
- The impact on Indonesia’s listed financial services sector was initially contained in 2025 but became more pronounced in the first half of 2026. After the IDXFinance index rose to 109.66 by end 2025, it fell sharply to 90.44 by June 2026. Banking stocks declined from 117.30 to 85.42, life insurance from 124.19 to 80.34, and multi-finance to 70.15, around 32% below its end 2025 level. This decline reflected investors’ reassessment of credit risk, funding cost pressures, and earnings prospects across the sector.
- First differenced monthly data from January 2020 to June 2026 show that contemporaneous exchange rate transmission to financial sector performance is generally weak. The clearest signals emerge in the January 2024 to June 2026 depreciation episode, with multifinance NPF and bank NPL correlations reaching +0.21 and +0.15, respectively, suggesting gradual credit quality deterioration. Life insurance and fintech P2P lending show stronger relationships in levels, consistent with cumulative medium term transmission through claims cost inflation and borrower financial fragility rather than immediate monthly effects.
Toward Stronger Financial Industry in Indonesia