Volkswacht Bodensee - Indonesia bank chief quits, adding uncertainty to struggling economy

President Prabowo Subianto has accepted the resignation of Perry Warjiyo, who had served as Bank Indonesia's governor since 2018, State Secretary Prasetyo Hadi told reporters in Jakarta.

Perry, whose second term was meant to expire in 2028, cited unspecified personal reasons for the surprise resignation, which he tendered on Saturday.

The bank's senior deputy governor, Destry Damayanti, has been appointed interim governor, said Prasetyo.

The stock market and currency remained "quite stable" in the hours after the government announced Perry's resignation, Central Bank Asia chief economist David Sumual told AFP.

But the move "may cast further policy uncertainty, which may not translate well to the rupiah and the economy in general".

The rupiah has taken a battering from surging energy costs, shedding about seven percent since the Middle East conflict erupted in February to become Asia's worst-performing currency, according to financial outlet Bloomberg News.

In a bid to bolster the rupiah, Bank Indonesia has lifted its key interest rate by 100 basis points this year to 5.75 percent.

Deni Friawan, a researcher at the Jakarta-based Centre for Strategic and International Studies, said Perry's surprise resignation could spook investors.

"Markets dislike surprises," he told AFP.

"When a central bank governor steps down unexpectedly, investors naturally question the future direction of monetary policy, inflation control, and exchange rate management."

- 'Credibility' -

Analysts say the choice of Perry's permanent replacement will be closely watched.

"Given the current environment of heightened uncertainty, policymaking experience and credibility should be key in picking a successor," said Sumual.

To Deni, "if the appointment is perceived as politically driven, investors may begin to question the institution's credibility. And that is a far more serious risk than the resignation alone."

Southeast Asia's biggest economy is a net oil importer, but the government has insisted on leaving the price of heavily subsidised fuel unchanged despite mounting pressure on the public purse.

Consumer prices rose 3.34 percent in June, and growing economic strain triggered student protests demanding the government stop excessive spending, including on its billion-dollar free-meals scheme, which has since been cut back.

Critics also hit out at a government decision to raise the non-subsidised fuel price by a third.

Indonesia's stock market has lost about a third of its value in 2026, and its stock exchange has been rattled by the threat of a downgrade by stock market compiler MSCI.

H.Gerber--VB