Jakarta. Over the past several days, Indonesia’s financial markets have been under considerable pressure. The rupiah has continued to weaken against the US dollar, approaching new psychological thresholds, while the Jakarta Composite Index (JCI) has suffered sharp corrections over consecutive trading sessions. In several instances, an even more worrying pattern emerged: markets became highly sensitive to rumors, speculation, and public statements made by government officials.

Part of the pressure undoubtedly comes from external factors. The strengthening US dollar, uncertainty over the Federal Reserve’s interest rate trajectory, and growing global investor caution toward emerging markets are affecting economies across the world. It would therefore be unfair to attribute all pressures on the rupiah and Indonesia’s equity market solely to domestic factors. Yet an important question deserves attention: Why do Indonesian markets appear significantly more sensitive than many of their peers in ASEAN and other emerging economies?

During the same period, currencies and stock markets in countries such as Malaysia, Thailand, Vietnam, India, and Brazil also experienced volatility. However, the pressure on Indonesia has been deeper and, in many ways, more emotional. Domestic markets have shown unusually high sensitivity to rumors, public statements by officials, and speculation surrounding government policy direction. This underlines an important reality: economies do not move solely on statistics and macroeconomic indicators, many of which remain open to interpretation. They are also shaped by perceptions, expectations, and confidence -- all of which are heavily influenced by the quality of public communication.

Financial markets fundamentally price the future. Investors are not merely assessing current economic conditions; they are trying to interpret policy direction, institutional consistency, governance quality, and the government’s ability to manage uncertainty. For that reason, public communication by state officials can no longer be viewed simply as politics or public relations. It has become an integral part of economic policy transmission itself.

This explains why many countries treat economic communication as a policy instrument and an essential component of market stabilization strategy. US Federal Reserve Chair Jerome Powell is widely known for choosing his words with extraordinary caution, as global markets often react even to subtle changes in tone or phrasing. Similarly, the European Central Bank carefully manages forward guidance to provide markets with clear signals regarding monetary policy direction.

Singapore offers another important example of disciplined economic communication. The government and the Monetary Authority of Singapore consistently maintain coherence between fiscal, monetary, and industrial policy narratives, allowing markets to operate with a relatively high degree of certainty. For a small yet highly open economy such as Singapore, communication credibility is regarded as part of national economic resilience.

History also shows how careless public communication can trigger or amplify market turbulence. Britain experienced severe stress in its bond market when comments surrounding the fiscal policies of former Prime Minister Liz Truss sparked concerns over fiscal sustainability and policy credibility. Government bond yields surged sharply, forcing the Bank of England to intervene to calm markets. A similar pattern occurred in Turkey, where President Recep Tayyip Erdoğan repeatedly expressed views that contradicted conventional monetary policy, particularly regarding interest rates and inflation. Such statements increased market uncertainty and intensified pressure on the Turkish lira.

These international experiences demonstrate that markets do not merely interpret formal policies. They also interpret the words of political leaders as signals of policy direction, governance quality, institutional discipline, and the government’s understanding of economic realities.

In recent days, Indonesian markets have reacted not only to economic data, but also to rumors regarding special commodity export arrangements, debates over state intervention in trade, and various public statements that generated conflicting interpretations. Such speculation even contributed to significant pressure on commodity-related stocks and heightened overall market volatility.

This illustrates how a vacuum of information -- or poorly managed communication -- can create an expensive uncertainty premium. When confidence becomes fragile, markets react rapidly to speculation. In the absence of clarity, rumors fill the information gap. And when public communication lacks precision, consistency, or coherence, markets may interpret it as a sign of rising policy risk.

In today’s era of social media and real-time information flows, the impact of public communication has become far greater than in the past. A single statement by a public official can be stripped of context, go viral within minutes, fuel emotional debate across digital platforms, and influence market sentiment almost instantly. Public discourse then becomes crowded with competing interpretations, denials, clarifications, polarization, and political noise -- often drifting further away from rational and data-driven discussion. In such an environment, markets do not seek only good policies. They also seek calmness, consistency, and clarity of direction.

This is precisely why countries require a much higher standard of public communication discipline. Statements made by public officials should be delivered carefully, precisely, and with full awareness of their potential psychological and economic consequences. This does not mean governments should avoid speaking publicly or refrain from projecting optimism. On the contrary, difficult moments require governments to provide direction and build confidence. But public trust and market confidence cannot be sustained merely through slogans or rhetoric. Confidence emerges from consistency between words, data, policies, and institutional quality.

Global economic history shows that markets can often tolerate weak economic figures in the short term. What markets find far more difficult to tolerate is policy ambiguity, contradictory public messaging from different officials, or the impression that policymakers do not fully appreciate the sensitivity of the situation they are facing.

Indonesia’s economic fundamentals are not inherently weak. Domestic consumption remains large, natural resources abundant, the financial sector relatively stable, and strategic investment opportunities continue to exist. Yet amid rising global uncertainty, one of the country’s most valuable economic assets remains trust. Because in an economy, markets do not read numbers alone. They also read tone, direction, consistency, and the quality of leadership reflected through public words and communication.

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Iman Pambagyo is the Trade Ministry’s Director General of International Trade Negotiations (2012-2014, 2016-2020) and Indonesia’s Ambassador to the WTO (2014-2015). The views expressed in this article are those of the author.

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