JAKARTA—Indonesian President Prabowo Subianto nominated acting Governor Destry Damayanti as the sole candidate to lead Bank Indonesia, a move intended to restore market stability following the unexpected July resignation of Governor Perry Warjiyo. Damayanti previously served as senior deputy governor.
Warjiyo, who had served as governor since 2018, resigned citing personal reasons. His second term was set to expire in 2028. State Secretary Prasetyo Hadi confirmed President Subianto accepted Warjiyo’s resignation.
Following the resignation announcement, the Indonesian rupiah weakened 0.36 percent to 18,000 to the U.S. dollar. The main stock index in Jakarta traded choppily, fluctuating between gains and losses.
The rupiah has faced significant pressure this year, shedding about seven percent against the U.S. dollar since the Middle East conflict began in Feb. This decline positions it as Asia's worst-performing currency. Bank Indonesia has intervened to support the currency, raising its key interest rate by 100 basis points this year to 5.75 percent.
Economists said the market has an aversion to surprises. David Sumual, chief economist at Bank Central Asia, said the change “could cast further policy uncertainty, which could negatively impact the rupiah and the economy.” Deni Friawan, a researcher at the Center for Strategic and International Studies, said investors question future monetary policy direction and exchange rate management following an unexpected central bank governor resignation.
Despite initial concerns, some analysts said the central bank's policy framework provides stability. Permata Bank Chief Economist Josua Pardede said Bank Indonesia's monetary policy framework is determined collectively by its Board of Governors, not by a single individual. This collective decision-making process suggests a more consistent policy trajectory.
Damayanti's prior experience as senior deputy governor makes her a familiar figure within the central bank's leadership. Her appointment as acting governor by Bank Indonesia's Board of Governors immediately after Warjiyo's resignation also indicates an internal, structured transition.
The appointment of a new governor requires a fit and proper test by the Indonesian parliament after the president submits a nomination. State Secretary Prasetyo Hadi confirmed President Subianto has not yet formally proposed the nomination to parliament.
Friawan said if the appointment is perceived as politically driven, investors could question the institution's credibility. He said this risk is more serious than the resignation itself.
The government urged calm among market participants during the transition period. Sumual said policymaking experience and credibility should be factors in selecting a permanent successor, given the current environment of uncertainty.
The nomination of an internal candidate like Damayanti, combined with Bank Indonesia's collective policy setting, offers a path to maintaining monetary policy consistency. This approach aims to mitigate market disruption associated with an unexpected leadership change.
