JAKARTA – Bank Indonesia's (BI) decision to keep interest rates unchanged is expected to lead to a steady offloading trend in Indonesia’s stock market as the year comes to a close.

According to Bella Ghassany, Investment Analyst at Indoasia Asset Management, BI maintained the interest rate at 6% yesterday, primarily to stabilize the value of the rupiah. “There’s no more intervention that can be done,” Bella told IDNFinancials today.

This decision to hold the interest rate may cause investors to adopt a "wait and see" approach. "It suggests that there’s still a lot of economic instability or something that needs to be safeguarded and risked,” Bella explained.

On the other hand, Bella noted that foreign investors are more likely to park their funds somewhere rather than invest in Indonesia’s stock market. This behaviour contributes to the weakened performance of the Jakarta Composite Index (JCI).

As previously reported by IDNFinancials, JCI has experienced a decline for five consecutive trading days. On Wednesday (18/12), JCI was closed at 7.107,88, down 0.70% from the previous day.

Bella added that BI indeed faces a difficult decision. Lowering interest rates could devalue the rupiah, while maintaining them leaves the market less enthusiastic. "But if they maintain the rate, market will not be happy," she said.

However, Bella revealed that many analysts are still optimistic about the usual year-end "window dressing." “But many also doubt whether the window dressing will be as significant as usual this time,” Bella added. (KR)