Bank Indonesia Governor Perry Warjiyo resigns two years early, deputy takes over

Resignation announcement

Perry Warjiyo, governor of Bank Indonesia since 2018, resigned on Monday, two years before his second five-year term was due to expire in 2028. State Secretary Prasetyo Hadi announced the decision at a briefing in Jakarta, where Warjiyo was not present. President Prabowo Subianto accepted the resignation. Senior Deputy Governor Destry Damayanti, who said Warjiyo stepped down for personal reasons, was appointed acting governor. The announcement took markets by surprise; Warjiyo had given no public indication of plans to leave early.

Market reaction

The rupiah fell as much as 0.3% against the US dollar before paring losses. Analysts said the surprise departure would heighten uncertainty and volatility across Indonesian financial markets. Radhika Rao, senior economist at DBS Bank in Singapore, said Warjiyo had steered the economy through the COVID-19 pandemic and the West Asia crisis, and that the immediate handover would ensure policy continuity.

Governor Perry played a pivotal role in steering the Indonesian economy through periods of transition and external shocks, including the COVID-19 pandemic and, more recently, the crisis in West Asia. The central bank adopted a more integrated framework, under his leadership, using a mix of rate policy, liquidity tools, FX intervention, and coordination with government.

Angus Mackintosh, ASEAN specialist at Aletheia Capital in Singapore, said the resignation would be taken negatively, given Warjiyo's track record. He warned that if Prabowo's nephew, Deputy Governor Thomas Djiwandono, were to take over, the market would view it with suspicion because the post requires technocratic independence.

Perry Warjiyo's resignation will likely be taken negatively by the market, given he was a steady pair of hands with a good track record. A lot will depend on who takes over, with Destry, a senior deputy governor, stepping in initially. If Prabowo's nephew (Thomas Djiwandono), as a deputy governor steps in, the market will regard this with suspicion, given this is a crucial technocratic post and BI should remain independent.

Policy backdrop

The resignation comes amid sustained pressure on the rupiah, which is one of the worst-performing emerging-market currencies this year. Bank Indonesia has raised interest rates three times since May to support the currency. Under Warjiyo, the central bank adopted a more integrated policy framework that combined rate decisions with liquidity tools, foreign-exchange intervention, and coordination with the government, Rao noted.

Independence concerns

Concerns over central bank independence have grown since Prabowo nominated his nephew Thomas Djiwandono as a deputy governor. Warjiyo's exit follows the dismissal of former finance minister Sri Mulyani Indrawati last year after violent protests against the government's economic policies. Within the past year, Indonesia has lost two of the officials most associated with its recent economic policymaking.

What's next

Damayanti will serve as interim governor while a permanent successor is chosen. The government did not immediately announce a timeline for the selection process. Analysts will closely watch whether the appointment remains free of political influence, given the market's sensitivity to central bank independence.