Indonesia’s sovereign wealth fund Danantara said on Friday that the credit rating outlook downgrade by rating agency Moody’s highlighted the need for institutional reform and policy consistency.
The agency’s affirmation of Indonesia’s investment grade reflected confidence in the country’s long-term prospects, it said, adding that it would continue to operate professionally, accountably and transparently as the country’s sovereign fund.
Indonesian stocks and currency traded weaker in early trade on Friday after Moody’s lowered the country’s credit rating outlook, the latest jolt in a turbulent start to the year for Southeast Asia’s largest economy.
The main stock index slipped more than 2 per cent while the rupiah dropped as much as 0.33 per cent to 16,880 a dollar, its lowest since January 22.
Moody’s said on Thursday it had cut Indonesia’s credit rating outlook to negative from stable, citing reduced predictability in policymaking days after MSCI flagged transparency issues that triggered a market rout of more than US$80 billion.
The global ratings agency cited concerns about policy effectiveness and signs of weakening governance, trends that it said could erode Indonesia’s long-established policy credibility if they persisted.
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