<div id="readability-page-1"><div> By Amanda Lee and Ying Xian Wong <pre></pre> Lingering concerns, including over Indonesia's fiscal trajectory and policy uncertainty, are continuing to spook investors, sending stocks and the rupiah tumbling Thursday. The Jakarta Composite Index fell as much as 5.0% to 5644.23, taking year-to-date losses to 34% and making it the worst-performing market across the region. The currency is the worst performer in Asia, hitting another record low against the dollar at 18,030 rupiah. The losses extend a recent selloff in Indonesian assets as investors fret over policy uncertainty and market credibility, analysts say. Indonesian authorities on Wednesday arrested Dadan Hindayana, the recently dismissed head of an agency responsible for President Prabowo Subianto's flagship free-meals program, said UOB Global Economics &amp; Markets Research in a note. The program has been under scrutiny amid concerns that it could pressure central government spending. More market volatility may be in store amid fiscal concerns and Indonesia's push to centralize the sale of strategic natural resources, including palm oil, coal and ferroalloys. While the policy could help the resource-rich country retain export earnings and boost foreign-exchange reserves, implementation challenges and concerns over greater state intervention could weigh on investor confidence and discourage long-term foreign investment in the commodity and downstream sectors. Indonesia is already under scrutiny by ratings companies Moody's Ratings and Fitch Ratings over reliability and transparency in policymaking, while index providers FTSE Russell and MSCI have raised concerns about Indonesia's investability. Policy worries aside, Southeast Asia's largest economy is also feeling the pain from the ongoing Middle East conflict. Indonesia's trade surplus narrowed sharply for April, while inflation continued rising last month amid the energy price shock. Combined with skyrocketing fuel subsidy costs, a shrinking trade surplus risks creating a destabilizing twin deficit on the fiscal and current account balances, weighing on investor confidence, said Kenanga economist Muhammad Saifuddin Sapuan. To combat rising inflation from the ongoing energy crisis and defend the currency, he forecasts Bank Indonesia to deliver a defensive 25-basis-point increase to the policy rate this month, in order to support the currency and anchor inflation expectations. <pre></pre> Write to Amanda Lee at amanda.lee@wsj.com and Ying Xian Wong at yingxian.wong@wsj.com <pre></pre> (END) Dow Jones Newswires June 04, 2026 01:44 ET (05:44 GMT)Copyright (c) 2026 Dow Jones &amp; Company, Inc.</div></div>

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Indonesian stocks and the rupiah plummeted due to investor caution over fiscal trajectory and policy uncertainty. The Jakarta Composite Index fell 5%, while the currency hit a record low against the dollar. Concerns stem from scrutiny of President Prabowo's free-meal program, centralization of natural resource sales, and ratings agency warnings. Additionally, Middle East conflicts have narrowed trade surpluses and raised inflation, prompting forecasts for a Bank Indonesia rate hike to defend the currency.

Indonesian Stocks, Rupiah Tumble Amid Investor Caution