Indonesian Rupiah: BI on hold as MSCI risk weighs – BBH
Elias Haddad at Brown Brothers Harriman reports that Bank Indonesia left its policy rate unchanged at 5.75% for a fourth meeting, even as IDR weakened slightly following MSCI’s downgrade consultation. BI expects the current account deficit to widen by 2026, increasing external funding needs, though ample FX reserves are seen as cushioning further Indonesian Rupiah weakness.
Bank Indonesia (BI) maintained its policy rate at 5.75% during its fourth consecutive meeting, while the Indonesian Rupiah (IDR) experienced a slight depreciation following MSCI's consultation on potentially downgrading Indonesia's stock index classification. BI anticipates the current account deficit to widen between 1.6% and 2.4% of GDP by 2026, increasing the need for external funding.
The country's substantial foreign exchange reserves, totaling $125bn in September (8.4% of GDP), provide a buffer against further IDR weakness, especially with a low daily turnover of around $7bn. MSCI's decision on reclassifying Indonesia's stock index is expected by the end of June 2027.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
