JAKARTA (March 18): Indonesian stocks plummeted 7% on Tuesday and the rupiah slid to a two-week trough, pressured by concerns over the government's fiscal strategy and the nation's growth prospects ahead of the central bank's monetary policy decision.

Jakarta shares hit 6,011.842 points, its lowest since September 2021, before paring losses to trade down 4% by 0646 GMT. The benchmark confirmed bear market territory on February 28 after falling more than 20% from its September 19 peak.

Alan Richardson, senior portfolio manager at Samsung Asset Management, said there was "policy uncertainty from Sri Mulyani potentially relinquishing her role as finance minister, formation of Nusantara and fiscal spending."

Nusantara is a planned new capital city being constructed in East Kalimantan to replace Jakarta.

"I believe the Prabowo government will be responsive to the stock market and compromise to restore investor confidence," Richardson said.

The selloff, which triggered a 30-minute trading halt on breaching the 5% mark, underscores mounting concerns about President Prabowo Subianto's ambitious spending plans.

 A nearly 30% drop in government revenues in January raised questions about fiscal sustainability and potential increased borrowing.

Bank Indonesia is widely expected to hold rates steady on Wednesday to prioritise currency stability. 

Indonesian rupiah, down about 2% this year despite central bank intervention, fell as much as 0.5% to its lowest since March 3.

Other Asian equities rallied on China's stimulus plans, including tax cuts and income boosts, expected to revitalise domestic consumption with positive spillover effects on regional trading partners.

Shares in India and Singapore rose more than 1%. Shares in the Philippines, however, reversed earlier gains to fall 0.4%.

US Federal Reserve policy meeting on Wednesday and Taiwan's policy meeting on Thursday will also be in focus, where the central banks are expected to stand pat on rates.

Regional currencies were pressured as investors awaited further directional cues about the economic impact of US President Donald Trump's erratic tariffs.

Concerns around widening trade disputes after Trump threatened 200% tariffs on European alcohol imports last week capped gains in currencies.

Tit-for-tat tariffs, if applicable, will negatively impact sentiment around trade-open economies such as South Korea, Indonesia, Malaysia and Thailand, according to analysts at SMBC. 

The South Korean won and the Indonesian rupiah slipped 0.3%, each, while the Singapore dollar and Japanese yen lost 0.2%, respectively.

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