Prabowo taps Destry Damayanti as chief of Bank Indonesia to calm markets
She had been considered a front runner due to her strong market credibility and constructive relationship with the president
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[JAKARTA] Indonesian President Prabowo Subianto nominated Destry Damayanti as the sole candidate to head the nation’s central bank, a move that may calm markets after veteran Perry Warjiyo unexpectedly resigned from the post in late July.
State Secretary Prasetyo Hadi, speaking on Monday (Aug 10) after submitting the Bank Indonesia (BI) acting governor’s name to parliament, did not say whether Destry had been nominated to serve out the remainder of Warjiyo’s term or to start a new five-year term.
The rupiah extended gains after the announcement, strengthening 0.7 per cent against the US dollar to the highest level in a month and outperforming Asian peers. Government bonds held earlier gains, while stocks pared losses to 0.1 per cent from 0.6 per cent.
Destry did not immediately respond to a request for comment.
The president also nominated candidates for senior deputy governor and deputy governor posts at the central bank, along with various ambassadorial posts and a commissioner position at the Financial Services Authority, Prasetyo said, without identifying nominees.
The earliest that parliament can meet to consider candidates is on Friday, when lawmakers return from recess to attend the president’s annual speeches ahead of Independence Day on Aug 17.
The president’s ruling coalition controls a majority in parliament, and political analysts expect the nominees to be swiftly approved.
Markets have been closely watching who will succeed Warjiyo since his early resignation on Jul 25 amid growing friction with the president. Appointing a permanent governor soon is critical to restoring investor confidence after a turbulent period that has seen the rupiah drop to record lows and local stocks tumble.
Destry, 62, had been considered a front runner due to her strong market credibility and constructive relationship with Prabowo.
She was appointed senior deputy governor at BI in 2019, helping oversee monetary operations, financial markets and payment systems while acting as a key voice on monetary policy and the rupiah.
Her nomination “will ensure policy continuity and should eliminate some market concerns over central bank independence”, noted Wee Khoon Chong, senior Asia-Pacific market strategist at BNY.
The move provides short-term relief, although the rupiah will need further support from foreign flows for a sustainable move, he added.
“This is good news,” said Ahmad Mikail Zaini, chief economist at Sucor Sekuritas. “Destry has a long experience in Indonesia’s capital markets and has good communications with the finance ministry, which will strengthen coordination between the two institutions.”
He added that he sees Destry as a supporter of liquidity for banks and capital markets, and expects a more dovish policy under her.
Fakhrul Fulvian, chief economist at Trimegah Sekuritas Indonesia, described the acting governor as an “adaptive, stability-oriented” central banker who has shown a willingness to support firm policy when credibility and financial stability require it, then shift towards liquidity, monetary transmission and growth once conditions improve.
That flexibility will be increasingly valuable as markets look beyond the policy rate to liquidity operations, exchange-rate management, macroprudential policy and forward guidance, he said.
“In today’s environment, policy clarity has become an economic instrument in its own right,” he noted. BLOOMBERG
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