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Stocks regain some losses after trading halt lifted

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Central bank has intervened aggressively to defend rupiah

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Bourse changes trading rules to anticipate stock selloff

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BI to weigh rate cut decision against FX weakness,

analysts say

(Adds analysts quotes in paragraphs 16-19 and changes keywords

for media subscribers, previously INDONESIA-STOCKS)

By Stefanno Sulaiman

JAKARTA, April 8 (Reuters) - Indonesia's stock market

sank on Tuesday, prompting a 30-minute trading halt, while the

rupiah fell to a record low as markets reopened after an

extended holiday break and reacted to the global market turmoil

caused by U.S. tariffs.

The main index fell 9.2% to its weakest since June

2021 in early trade. After the trading suspension was lifted,

the index recouped some of its losses and was down 7.6% by 0704

GMT.

The rupiah fell 1.8% to as low as 16,850 per dollar,

surpassing its Asian Financial Crisis trough to its weakest on

record, according to LSEG data.

The central bank has and will continue to "intervene

aggressively" in the spot foreign exchange, domestic

non-deliverable forward (NDF) and bond markets, as well as in

the offshore NDF market, to stabilise the rupiah, Fitra

Jusdiman, a Bank Indonesia (BI) official said.

However, some analysts predict further declines, even as the

stock exchange modifies trading rules to prevent excessive

selloffs.

Ahead of Tuesday's market opening, the exchange tightened

auto-rejection rules for share transactions. Now, if a stock

falls by 15%, sell orders would be automatically rejected,

compared with the previous trigger of a share price fall of

between 20% and 35%.

The bourse stated that a fall of 8% in the main index would

trigger a 30-minute trading halt, expanded from 5% previously.

Another 30-minute halt is triggered if the market then extended

losses to 15%.

A decline of more than 20% would result in trading being

suspended for the rest of the day, which the bourse said would

allow investors "liquidity space and opportunity" to process

information. The previous trigger for such suspension was a 15%

drop.

"These are taken in anticipation of market conditions. We do

not want to create panic, but we want domestic and foreign

investors to have confidence that we give them enough room to

transact after more than a week of break," IDX chief executive

Iman Rachman told a press conference.

Trading rules could be adjusted back when conditions return

to normal, an IDX executive said.

Oktavianus Audi, a vice president at brokerage Kiwoom

Sekuritas, said the new auto-reject rules could provide some

support for the stock index, but emphasised that the rule

changes would only serve as short-term measures.

"Basically, the concern in the market is caused by

macroeconomic factors and Trump's tariff policy," he said.

"So in our opinion, to ease market pressure we need

strategic measures by the government to maintain the rupiah's

stability, ensure economic growth remains above 5% and a

strategic response to maintain Indonesia's trade surplus," Audi

said.

RATE CUTS?

Fitra at BI said the central bank would continue its market

stabilisation efforts to maintain market confidence while it

monitors developments.

Several economists expected more dovish moves by the U.S.

Federal Reserve which may give BI space for bigger rate cuts, or

bring them forward, to bolster growth. However, policymakers

would have to weigh that against the impact on the rupiah.

"Further one-sided weakness in the rupiah, due to global

uncertainties and lingering lack of clarity on domestic issues,

might push the markets to price out rate cuts this year," said

DBS Bank economist Radhika Rao.

Potential more Fed rate cuts, as well as low inflation

domestically, would provide room for BI to cut rates, said Bank

Danamon economist Hosianna Situmorang, adding that annual

inflation in March was 1.03%, below the central bank's target

range.

Brokerage Mandiri Sekuritas, in a note to clients, said it

expected less impact from tariffs on Indonesian equities

compared with other markets due to its more domestically-driven

economy. It predicted Jakarta could outperform other markets

should there be any softening in the U.S. position on tariffs.

Indonesian markets closed on March 27 for Eid al-Fitr

holidays and are catching up with global market movements

following the U.S. tariff announcement last week, which included

a plan for a 32% tariff on Indonesian products.

Markets were already under pressure before the break due to

concerns over Indonesia's fiscal policy and growth prospects.

Jakarta plans to pursue negotiations rather than retaliate

against the U.S. tariffs, proposing to buy more U.S. products.