JAKARTA: President Prabowo Subianto nominated three senior Bank Indonesia officials to fill the central bank’s top leadership positions, reinforcing expectations of policy continuity after he picked Destry Damayanti as the sole candidate for governor.
Prabowo nominated Aida S. Budiman, currently a deputy governor at Bank Indonesia, to become senior deputy governor, Parliament Speaker Puan Maharani said in Jakarta late Wednesday (Aug 12). He also put forward executive directors Solikin M. Juhro and M. Anwar Bashori as candidates for deputy governor.
The rupiah was little changed while the 10-year government bond yield slipped two basis points to the lowest in a month in early trading on Thursday. The benchmark stock index fell 1.1% after MSCI Inc. removed two Indonesian companies from its indexes.
The nominations of career Bank Indonesia officials to fill leadership gaps could reduce uncertainty over the direction of monetary policy in the wake of former Governor Perry Warjiyo’s sudden departure late last month.
They also suggest support for a technocratic approach likely to maintain existing policies while balancing currency stability with the government’s growth ambitions.
"Appointing career central bankers to Bank Indonesia’s top seats buys crucial institutional credibility,” said Eugenia Fabon Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore.
However, the appointments alone will not be enough to prop up the rupiah as "the central bank may soon have to step up to the plate and hike rates” to convince investors that its commitment to currency stability remains intact, she said.
Budiman would replace Destry, who has served as senior deputy governor since 2019 and was named acting governor after Warjiyo resigned.
Destry’s nomination this week as Prabowo’s sole candidate to lead the central bank was seen by investors as a signal of policy continuity, helping bolster the rupiah after weeks of market volatility.
Prabowo’s choices come as Bank Indonesia faces heightened scrutiny over its independence and its role in supporting the the government’s growth push. The central bank’s mandate was expanded under recent legislation to include contributing to sustainable economic growth, increasing the importance of coordination between monetary and fiscal policy.
The nominees are subject to parliamentary approval. Lawmakers are expected to begin considering the nominations next week, Maharani said. - Bloomberg
