Indonesia rupiah drops to record low on strong US dollar, MSCI woes

Jakarta – The Indonesian rupiah plummeted to a record low as the US dollar strengthened and fears of MSCI potentially removing the country from its emerging-market indexes loomed large. The rupiah dipped up to 0.3% against the dollar, reaching 18,204 per dollar on November 12th, surpassing the previous low of 18,190 seen in June.

The Jakarta Composite Index of shares surged 0.8%, while the 10-year bond yield remained stable at 7.62%. The currency's weakness has been exacerbated by the US dollar's overnight surge, driven by expectations of the Federal Reserve resuming interest rate hikes in December. Meanwhile, investor confidence remains fragile following MSCI's proposal in October to classify Indonesia as a standalone market, citing sustained concerns over investability.

Goldman Sachs estimated a potential outflow of $5.6 billion (S$7.2 billion) should such a move occur, as it would effectively strip Indonesia's stocks from MSCI's indexes. This warning has added to a myriad of woes already plaguing Indonesian assets, including policy uncertainties and the risk of a sovereign rating downgrade. The country's oil prices, persistently high, are further straining public finances by inflating subsidy costs.

The rupiah has weakened over 8% against the US dollar in 2026, making it the worst-performing currency in Asia. Bank Indonesia has reassured that it remains vigilant about market developments and is closely monitoring capital outflows following the MSCI announcement.