Indonesian Rupiah Loses More Than 8% Against Dollar as MSCI Pressure Resurfaces
Key Facts
The Indonesian rupiah has lost more than 8% against the dollar since the start of 2026, and its intraday low set a new 52-week trough, according to a Reuters report published by Investing.com. The report linked the pressure to Indonesian stocks being removed from MSCI indexes and renewed dollar strength. The currency is weakening amid pressure on Indonesian markets, without independent confirmation of reports attributing foreign-exchange market intervention on November 12 to the central bank. The Reuters report described the rupiah as the worst-performing among major Asian currencies. The decline puts currency moves at the forefront of investors’ monitoring of the impact of the dollar and foreign investor sentiment.
Against the backdrop of the pressure, the Jakarta Composite Index fell 11.57% on October 16, and the rupiah weakened to 18,052 per dollar, according to the Jakarta interbank spot rate, after MSCI announced a proposal to reclassify the Indonesian market. A Bank Indonesia official said at the time that the rupiah remained within manageable limits. The official added that the bank was prepared to intervene if supply-demand imbalances in the foreign-exchange market pushed volatility beyond acceptable limits. On October 26, Bank Governor D. Damayanti said the rupiah had weakened 0.30% to 18,135 per dollar amid concerns about an escalation of geopolitical conflict in the Middle East. She said currency moves are affected by daily supply and demand, that the bank did not plan to change its intervention strategy, and described the fluctuations as within normal market movements.
The bank’s interventions rely on tools in domestic and offshore markets, including swaps and domestic non-deliverable forwards, according to an Antara report. Capital flows attracted through these instruments totaled about 8 to 8.5 billion dollars through October 19, the report said. Damayanti said the impact of MSCI’s proposal on the market and capital flows could be short-lived, and that governance reforms could help restore investor confidence. The index provider announced it would issue its final decision on the classification of the Indonesian market by late June 2027, with periodic updates during the consultations. The rupiah’s trajectory remains linked, according to the factors cited in the reports, to dollar strength, MSCI developments, geopolitical tensions and foreign investor sentiment.