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Indonesian financial markets experienced a sharp selloff on Friday, February 6, after Moody’s Investors Service lowered the nation’s credit rating outlook from stable to negative, sparking fears over the transparency and predictability of President Prabowo Subianto's economic policies. The benchmark Jakarta Composite Index tumbled 2.5%, while the rupiah hit its weakest level since late January, as international investors reacted to concerns regarding central bank independence and the fiscal impact of ambitious 8% growth targets. This latest volatility follows a previous week of heavy losses, effectively wiping approximately $120 billion off the country’s equity market capitalization since the start of the year. The outlook revision by Moody’s specifically targeted the $1.4-trillion G20 economy’s shifting legislative landscape, citing reduced predictability in policymaking and potential risks associated with the newly established sovereign wealth fund, Danantara Indonesia. Analysts suggest that the fund's current structure could create contingent liabilities for the government and erode long-standing policy credibility. In a ripple effect, Moody’s also downgraded the outlooks for several of Indonesia’s largest state-owned entities and financial institutions, including Telkom Indonesia and major lenders, due to their direct exposure to sovereign credit risks. Government officials have attempted to project confidence despite the market turmoil, with Finance Minister Purbaya Yudhi Sadewa stating that economic fundamentals remain robust and the fiscal deficit is under control. Minister Purbaya dismissed the necessity of a downgrade, suggesting that accelerating growth could lead to a rating upgrade by the end of the year. However, market experts from firms like OCBC and Mirae Asset Sekuritas described the move as a "warning shot" that could lead to higher risk premiums across all Indonesian asset classes if other agencies like S&P Global or Fitch follow suit. Foreign investors have already liquidated nearly $860 million in Indonesian equities since last Wednesday, signaling a significant shift in sentiment compared to the previous year. While the five-year credit default swap spread—a measure of default insurance costs—surged to a 15-month high, some analysts note that competitors like S&P and Fitch have yet to change their stable outlooks. The coming months will be critical as authorities attempt to stabilize the market and address transparency issues that have triggered one of the most volatile periods for Southeast Asia’s largest economy in recent years.