Indonesia: Could the 1997 crisis return? Sovereign creditworthiness under pressure | Insight Out (Dr. Choi Jun-young, Yulchon)

An independent exercise, not a statement by the video creator or verification of every claim in the video.

A local share-price gain can still mean a loss in won

For an unhedged hypothetical holding over the same period, a 20% equity gain in rupiah and a 20% fall in the rupiah’s won-denominated value change an initial 100 into 100×1.20×0.80=96, a return of −4%. Simply adding the returns to obtain 0% is incorrect. A 15% currency-value decline instead gives 100×1.20×0.85=102, a won return of 2%; with a 20% equity gain, the break-even decline in the currency’s value is about 16.67%.

Check for yourself

1. Is the exchange rate quoted as the rupiah’s value in won or the won’s value in rupiah?
2. Do the equity return and currency move cover the same holding period, and can the position actually be sold and converted?

Limits of application

These are unitless hypothetical prices, not forecasts for Indonesian equities or exchange rates. Dividends, taxes, trading and conversion costs, transfer restrictions, bid-ask spreads and hedging costs are excluded; inadequate liquidity may prevent execution at the calculated price.