Indonesia's stock market continued its recovery trend in August 2026, although the pace of the rally began to ease compared with July's sharp rebound. The ICI still posted a monthly gain, though on a year-to-date (YTD) basis, the index remained in correction territory due to lingering effects of the heavy pressure seen in the first half of the year. The recovery momentum was supported by sustained net buying from foreign investors, an increase in foreign exchange reserves, and Bank Indonesia's decision to hold its benchmark interest rate steady to safeguard rupiah stability. However, toward the end of the month, external pressures resurfaced as the rupiah weakened following a hawkish speech by the Fed’s official and escalating US–Iran geopolitical tensions in the Middle East, while MSCI kept Indonesian stocks under its freeze status in the August 2026 Index Review.
