IHSG Drops Nearly 2%: Key Causes and Impact on Indonesia's Economy

September 13, 2026 at 06:30 AM· 5 min readAI-assisted

Key Points

The Jakarta Composite Index (IHSG) dropped nearly 2% due to rising global oil prices and expectations of tighter monetary policy from the Federal Reserve. This decline affects investor confidence and could impact future foreign investments in Indonesia.

The Jakarta Composite Index (IHSG) experienced a nearly 2% decline due to rising global oil prices and expectations of tighter monetary policy from the Federal Reserve.
Global oil prices have surpassed 100 US dollars per barrel, contributing to the pressure on the IHSG.
The Federal Reserve's anticipated interest rate hikes could lead to capital outflows from emerging markets, including Indonesia.
The IHSG decline impacts investor confidence and could affect future foreign investment flows into Indonesia.
Analysts recommend diversification strategies and stocks with strong fundamentals to mitigate investment risks.

The Jakarta Composite Index (IHSG) experienced a significant decline of almost 2% towards the end of this week, a sharp drop in Indonesia's financial world.

This decline was primarily caused by the surge in global oil prices and expectations of tighter monetary policy from the Federal Reserve (Fed). On Friday morning, the IHSG opened weaker with a drop of 36.55 points, indicating significant pressure on the domestic stock market.

Detailed Causes of IHSG Decline

The IHSG experienced a nearly 2% decline today, caused by several global and domestic economic factors. One of the main factors is the rise in global oil prices, which have reached over 100 US dollars per barrel. This increase in oil prices puts pressure on the global economy, including Indonesia, which relies on oil imports.

Additionally, expectations of tighter monetary policy from the Federal Reserve, known as "hawkish," add pressure to the stock market.

The Fed is expected to raise interest rates to curb inflation, which could lead to capital outflows from emerging markets, including Indonesia.

This volatile stock market condition not only affects the IHSG but also puts pressure on the rupiah exchange rate, which is experiencing pressure along with the weakening IHSG. This combination of external and internal factors creates a challenging environment for investors and market players.

Key Figures and Involved Actors

At the opening of the market this Friday, the IHSG opened weaker with a drop of 36.55 points to the position of 6,552. This is a sharp decline that reflects negative sentiment among investors.

The global oil price, which has surpassed 100 US dollars per barrel, is one of the main factors affecting the IHSG. On the other hand, expectations of monetary policy from the Federal Reserve also play an important role.

The Fed's "hawkish" policy is anticipated to impact interest rate hikes that could reduce the attractiveness of risky assets such as stocks in emerging markets.

Analysts from various securities firms and financial institutions, including the Bareksa Analyst Team, had previously predicted that the IHSG would experience consolidation. However, the surge in oil prices and tighter Fed policy added unexpected pressure on the market.

Background and Related Previous Events

The global financial markets have experienced turmoil in recent months, primarily due to global economic uncertainty and monetary policy from major central banks worldwide.

The surge in oil prices is largely triggered by geopolitical tensions in major oil-producing regions, disrupting global oil supply. In Indonesia, despite efforts to stabilize the domestic economy, external influences still have a significant impact.

Previously, the IHSG had shown signs of recovery after going through a period of high volatility, but the rise in oil prices and tighter Fed policy again pressured the market.

Since the beginning of the year, various external factors such as global trade tensions and changes in monetary policy in developed countries have affected the IHSG. This situation is exacerbated by domestic political and economic uncertainty, which further burdens the Indonesian stock market.

Impact and Influence on Various Parties

The nearly 2% decline in the IHSG has a significant impact, not only on large investors but also on retail investors and companies listed on the exchange.

Many investors suffered losses due to the decline in stock values, while companies face challenges in keeping their stock prices stable. Retail investors, who are often more vulnerable to market fluctuations, may need to review their investment portfolios and consider new strategies to mitigate risk.

This also adds pressure on companies that rely on the capital market for funding. Additionally, this decline sends a negative signal for the overall economy, as the IHSG is often considered a barometer of Indonesia's economic health.

This decline could affect investor confidence in the Indonesian market, which could impact future foreign investment flows.

Reactions, Official Statements, and Analysis

Reactions to the IHSG decline come from various circles, including the government, financial institutions, and market analysts. The Indonesian government, through the Ministry of Finance, stated that it will continue to monitor the situation and is ready to take necessary steps to maintain economic stability.

Analysts from CNBC Indonesia and IDNFinancials noted that the impact of rising oil prices and tighter Fed policy is indeed unavoidable, but they also emphasized the importance of diversification strategies to reduce risk.

Some analysts recommend stocks with strong fundamentals and long-term growth potential as safer investment options.

Meanwhile, Bank Indonesia stated that it is ready to continue safeguarding the stability of the rupiah exchange rate and keep inflation under control. The central bank is also considering adjusting its monetary policy if necessary to mitigate the impact of these external factors.

What's Next and Open Questions

Going forward, the main focus will be on how the market will respond to developments in oil prices and monetary policy from the Fed. Investors and market players must closely monitor these developments to anticipate potential further impacts.

The big question that remains open is whether the government and monetary authorities will take additional steps to stabilize the market and support economic growth.

Additionally, how geopolitical developments and global economic policies will affect the Indonesian market is also a major concern. In the long term, it is important for Indonesia to strengthen its economic foundation, including through economic diversification and enhancing global competitiveness.

This will help reduce dependence on external factors and increase resilience to future global economic shocks.

Frequently Asked Questions

Why did the Jakarta Composite Index (IHSG) decline by almost 2%?+

The IHSG declined by almost 2% primarily due to the surge in global oil prices, which have exceeded 100 US dollars per barrel, and expectations of tighter monetary policy from the Federal Reserve. These factors put pressure on the Indonesian stock market and the broader economy.

How do global oil prices affect the Indonesian stock market?+

Global oil prices affect the Indonesian stock market because Indonesia relies on oil imports. A rise in oil prices increases costs and economic pressure, which can negatively impact investor sentiment and lead to declines in stock market indices like the IHSG.

What is the Federal Reserve's 'hawkish' policy, and how does it impact emerging markets?+

The Federal Reserve's 'hawkish' policy refers to its approach to raising interest rates to curb inflation. This can lead to capital outflows from emerging markets, including Indonesia, as higher interest rates in the US make it more attractive for investors to move their capital there, reducing the appeal of riskier assets like stocks in emerging markets.

What impact does the decline in the IHSG have on investors and companies?+

The decline in the IHSG impacts investors by reducing the value of their stock holdings, leading to potential financial losses. Companies listed on the exchange face challenges in maintaining stable stock prices, which can affect their ability to raise capital and fund operations. Retail investors, in particular, may need to reassess their investment strategies to manage risk.

What external factors have influenced the IHSG in recent months?+

In recent months, the IHSG has been influenced by global economic uncertainty, geopolitical tensions affecting oil supply, and changes in monetary policy from major central banks. Additionally, global trade tensions and domestic political and economic uncertainties have exacerbated pressures on the Indonesian stock market.

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Written by

Redaksi RusdiMedia

RusdiMedia's editorial team. Our articles are drafted with AI assistance and reviewed by human editors before publication, following our editorial methodology and corrections policy.

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