(Bloomberg) -- Indonesian assets rose on Tuesday after Finance Minister Sri Mulyani Indrawati was asked by President-elect Prabowo Subianto to stay on in his new administration with just days to go before his inauguration this weekend.
The rupiah edged up as much as 0.2% to 15,535 per dollar in early trading, outperforming emerging-Asian peers. The benchmark stock gauge in Jakarta rose as much as 0.9% as Asian equities gained, extending a rally to a third day.
Indrawati confirmed the offer as dozens of potential cabinet candidates emerged from a marathon meeting with the incoming Indonesian leader at his home on Monday. Gaining her support will be a major win for Prabowo as he attempts to turbo-charge growth in Southeast Asia’s largest economy.
“Sri Mulyani’s leadership in the Finance Ministry can definitely alleviate some of the consternations about Indonesia’s fiscal risks,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Singapore.
A former World Bank managing director, Indrawati was seen as a steady hand in ensuring the country’s fiscal health for much of Joko Widodo’s decade-long rule. When asked by reporters whether she would join Prabowo’s cabinet, she smiled and said: “We will help as much as possible.”
Prabowo said all attendees expressed willingness to join his team. The finance minister will likely consult with her family, said Sufmi Dasco Ahmad from Prabowo’s team, who added that until the incoming president’s oathtaking on Oct. 20, “everything is still dynamic.”
The new Indonesian leader will hold another round of meetings with potential cabinet members on Tuesday. Prabowo is expected to unveil his ministers after the swearing in.
If Indrawati accepts Prabowo’s offer, this will be her third stint as Indonesia finance minister. She first took on the role during the presidency of Susilo Bambang Yudhoyono and reprised it in 2016 under Jokowi. Her openness to join Prabowo’s cabinet is a seeming reversal from earlier this year when she considered quitting Jokowi’s cabinet because of his support for the former military general.
“Sri Mulyani’s appointment would instantly strengthen the rupiah, bonds, and stocks because there is no longer uncertainty on the new finance minister’s policies,” said Ahmad Mikail, economist at PT Sucor Sekuritas.
Given her track record of prudent budget management, with the fiscal deficit consistently remaining below 3% of gross domestic product, Indonesia will likely be on track to bring down its borrowing costs and boost its credit ratings, he added.
Others were more cautious. Lionel Priyadi, macro strategist at PT Mega Capital Sekuritas, said Indrawati’s credentials helps with market confidence but it was not enough.
“It is not necessarily euphoria as the market is also keeping an eye on the fundamental challenges facing the Indonesian economy,” he said. “It’s how the government as a whole can navigate the economic challenges ahead, such as the weaker global growth and commodity prices, and the potential widening current account deficit.”
--With assistance from Matthew Burgess and Prima Wirayani.
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